Financial math help (1 Viewer)

[CopperPike]

Hey guys, i've been stuck on this question for a while. Its from Cambridge:

This is the answer. But why is the profit 21x larger?


Thanks in advance to anyone that helps

 

[Leadmen4y]

The wording is kinda weird but I suppose you could look at it this way, say this is the question:

The profits of a company... If this trend continues, how many years will it be before the profit has increased by over 100%?

Obviously, it would be 2 times. Hence, that explains why it is 21 times larger (20 +1 = 21). Did that make sense?

Edit: I guess the key word here is 'by' meaning 'in addition' to the previous amount.

 

[CopperPike]

The wording is kinda weird but I suppose you could look at it this way, say this is the question:

The profits of a company... If this trend continues, how many years will it be before the profit has increased by over 100%?

Obviously, it would be 2 times. Hence, that explains why it is 21 times larger (20 +1 = 21). Did that make sense?

Edit: I guess the key word here is 'by' meaning 'in addition' to the previous amount.

I'm confused. Is this an AP or GP. I took it as an AP, where it take 14 years for profit to increase over 100% because profit increases by 14%.

when you say 'it would be 2 times', what percentage are you referring to, because it looks like 50% if this question is a AP.

 

[CopperPike]

Oh I was only giving on example to elaborate on why increasing BY over 2000% equates to 21 times, not knowing you also didn't get that.
This is a GP because every year it COMPOUNDS, for example:
Let a be the initial profit.
1st year -
2nd year -
And this would equal to:

Which is:

Does that illustrate it?

Edit: latex errors

That makes a lot more sense. Thanks for the help!