# Very basic geometric growth calculation...

• September 27th 2010, 04:28 AM
cranmerm
Very basic geometric growth calculation...
Hi all,

I am training in IT but I don't yet have much grasp of anything other than day-to-day mathematics.

I am wanting to get to grips with what is no-doubt a rudimentary mathematical calculation that calculates the 'geometric growth' of server usage over a given number of months.
Geometric growth, also known as compound growth, is characterized by a increase in steady percentage, factor, or ratio per time period, as in an increase in database size of 2 percent per month. To project geometric growth into the future, use the following formula:
Future Usage = current usage x (1 + growth rate)number of periods
When using this equation, be sure to express the growth rate as a decimal value. For example, if the database is currently 600GB and grows at the rate of 2 percent a month, you can calculate what size the database will be in 3 years (36 months) by filling the values into the preceding formula.

Database Size in 3 Years = 600 x (1+.02)36

Database Size in 3 Years = 600 x (1.02)36

Database Size in 3 Years = 600 x (2.04)

Database Size in 3 Years = 1224GB
I don't quite get how the number of months (36) is used in the above calculation. Could someone walk me through this?

Cheers,

mark
• September 27th 2010, 06:32 AM
SpringFan25
im not quite sure what you're asking, if its "how do i do this on my calculator", then look for the "raise to the power of" button, normally marked $x^y$ or ^

If you mean to ask "what is the formula doing", then you should check you know what indices are
http://www.mathsrevision.net/gcse/pages.php?page=26

And how to calculate a percentage increase
http://www.mathsrevision.net/gcse/pages.php?page=31

The formula just calculates 1 month percentage increase, and repeats the process 36 times: 600 * 1.02 * 1.02 * 1.02 * 1.02.....
• September 27th 2010, 07:57 AM
cranmerm
Oh yes, that makes perfect sense; which is more than can be said about my initial post.

The problem I was having was not being able to relate the calculation to the problem being solved. I now see how the exponent relates to monthly percentage increase - what is the significance of adding 1 to the 0.02 if the monthly percent increase is 2%?

Sorry for being a little dim in this area..

thanks for the help.

Mark