# Thread: Very basic geometric growth calculation...

1. ## 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

2. 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 $\displaystyle x^y$ 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.....

3. 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