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Compound Interest

Growth and Depreciation

Sukhiram is the sarpanch of a village and is very good at mathematics. The current population of his village is 18550. From the record of past years, he observed that the population of the village is increasing at the rate of 4% per year. On the basis of the current growth rate, he wants to know the population of the village after 2 years. How can he do so?

Actually, it is a problem of growth (or appreciation). If he knows the formula, then he can easily find out what he wants to know.

Let us understand the formula that should be used here.

The growth per unit time is called the rate of growth.

Currently, the population of the village is increasing at the rate of 4% every year.

This means that in a year the population increases by 4% of the previous population. Hence, the rate of growth is 4% and is denoted by r.

r = 4%

If V0 is the current measure of quantity and V is the measure of quantity after n years, then

This is the relation between the current measure of a quantity and the mea…

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