Question

Calcurama had a net income of 5 million dollars in 2010, while a small competing company, Computafest, had a net income of 2 million dollars. The management of Calcurama develops a business plan for future growth that projects an increase in net income of 0.5 million per year, while the management of Computafest develops a plan aimed at increasing its net income by 15% each year.

how are they increasing ??‽?
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Answer 1

Using function concepts, it is found that:

• The net income increase of Calcurama is linear.
• The net income increase of Computafest is exponential.

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• In a linear function, the rate of change is a constant number.
• In an exponential function, the rate of change is a constant percentage.

• The increase for Calcurama is of 0.5 million per year, which is a constant, thus, the increase is linear.
• The increase for Computafest is of 15% per year, which is a percentage, thus it is exponential.

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