Exponential Function models annual rate of increase.

Question

The exponential function models the annual rate of increase. Find the monthly and quarterly rates.

f(t)=2000(1.03)^t

Answer 1

From exponential function we have annual rate is r = 0.03 = 3%. This means that monthly rate i₁ = r/12 = 0.25% and quarterly rate i₂ = r/4 = 0.75%