Quantitative Literacy Practice Exam

If the population grows at a rate of 4.9% annually, what factor would result from 8 years of growth?

1. 1.431

2. 1.329

3. 1.414

4. 1.495

The correct answer is: 1.431

To determine the factor resulting from 8 years of growth at an annual rate of 4.9%, you can use the formula for compound growth, which is given by: \[ \text{Growth Factor} = (1 + r)^t \] In this formula, \( r \) represents the growth rate expressed as a decimal and \( t \) represents the number of years. For this question, the growth rate of 4.9% can be converted to decimal form as follows: \[ r = 4.9\% = 0.049 \] Now, substituting \( r = 0.049 \) and \( t = 8 \) years into the formula gives us: \[ \text{Growth Factor} = (1 + 0.049)^8 \] \[ = (1.049)^8 \] Calculating \( (1.049)^8 \), you find that it is approximately equal to 1.431. This value reflects the multiplier effect of compound growth over 8 years at the specified annual growth rate. Therefore, the factor resulting from 8 years of growth at an annual rate of 4.9% is indeed