# Exponential Modeling

A can of soda in 1972 costs \$0.10, by 2012 it cost \$1.25.

Find the rate at which the cost of a can of soda increases over this time period.

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1. if the rate of increase is linear, then
rate = (1.25 - .10)/(2012-1972)
= 1.15/40 = .02875
or appr 3 cents a year

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2. on the other hand, given the topic of the posting,

0.10(1+r)^40 = 1.25
(1+r)^40 = 12.5
1+r = 1.065
r = 6.5% per year

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