Math 1 · Unit 8 · Lesson 2 · part 1 of 5
The Words We Use
The vocabulary for this lesson, in one place.
Words we use
| Word | Plain English | What you do |
|---|---|---|
| Compound interest | Interest paid on the principal and on the interest already earned. | Interest on interest: the balance multiplies each year. |
| Compounded annually | Interest is added once a year. | One multiplication by 1 + r per year. |
| Growth factor | 1 + r, the number you multiply by each year. | 5% gives 1.05. It is the b of y = a · bx. |
| Growth rate | r, the percent. How far the factor is from 1. | A factor of 1.055 is a rate of 5.5%. |
| Initial value (principal) | P, the amount at the start, when t = 0. | It is the a of y = a · bx. |
| Constant ratio | The same number multiplied each step: the exponential pattern. | Divide one year's balance by the year before: 1.05. |