Most Students Get This WRONG 😳

When learning about percentage increases like rent hikes, it’s very common to instinctively add the percentage directly to the base amount. However, the key to mastering problems like these is understanding exponential growth. For instance, if the rent starts at $720 and increases by 4% per floor, the increase compounds each time you move up a floor. This means you multiply by 1.04 for each floor rather than just adding $28.80 (which is 4% of $720) repeatedly. This subtle but crucial difference makes your calculations accurate and reflects how many real-world financial scenarios work. So, the rent on the 10th floor isn’t just $720 + (10 × 4%), but $720 × 1.04¹⁰. This exponential factor accounts for the increase building upon itself, rather than a flat rate increase. From my experience tutoring students, I’ve noticed that this confusion is widespread because percentage growth is often misinterpreted as linear. Visualizing the problem by thinking of it as "increasing growth" rather than a fixed addition helps a lot. It’s also helpful to use a calculator or spreadsheet to see how the numbers grow as you apply the 1.04 multiplier repeatedly. In conclusion, recognizing when growth is exponential can improve your math skills significantly — it’s applicable not just for rent, but for investments, population growth, and any context involving percentage increases over time. Keep practicing these concepts, and soon it will become second nature to multiply rather than add in these cases.