The tax revenue that a small city receives increases by 3.5% per year. in 1990, the city received $250,000 in tax revenue. Determine the tax revenue in 1995 and in 2006.

Hello there! For this question, because the revenue increases, we will be compounding. The formula for coompounding is P (1 + r) ^t, where P = initial amount, r = rate in decimal form, and t = time in years. First, let's add 1 into the rate. 3.5% is 0.035 in decimal form. 1 + 0.035 is 1.035. 1995 is 5 years from 1990 and 2006 is 16 years from 1990. Let's start by raising it to the 5th power. 1.035^5 is 1.187686306. Do not delete the number from your calculator. Multiply it by 250,000. When you do, you get 296,921.5764 or 296,921.58 when rounded to the nearest hundredth. We solved for 1995. Now, let's solve for 2006. 1.035^16 is 1.73398604. Again, do not delete the number from your calculator. Multiply by 250,000. When you do, you get 433,496.509957 or 433,496.51 when rounded to the nearest hundredth. There. Here are your answers:

1995: $296,921.58

2006: $433,496.51