A monthly growth rate of 0.5% is an annual growth rate of:
A) 6.00%
B) 5.00%
C) 6.17%
D) 6.50%

Name: A monthly growth rate of 0.5% is an annual growth rate of: A) 6.00% B) 5.00% C) 6.17% D) 6.50%
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Question

Quizplus · Accepted Answer

To convert the monthly growth rate to an annual growth rate, we need to use the formula: 
[(1 + r)^12] - 1 
where r is the monthly growth rate as a decimal.

Plugging in 0.005 for r, we get: 
[(1 + 0.005)^12] - 1 = 0.0617 or 6.17%

Therefore, the annual growth rate is 6.17%, which corresponds to choice C.

A Monthly Growth Rate of 0