Question

Given an exponential function for compounding interest, A(x) = P(1.04)x, what is the rate of change? (1 point) A. 4% B. 1.04% C. 104% D. 0.04%

Answer 1

The rate is 104%, option C.

What is the rate of change?

The general exponential equation is written as:

`y = A*(b)^x`

Where A is the initial value, b is the rate of change, and x is the variable.

In this case the exponential equation is just:

`y = P*(1.04)^x`

So the rate is 1.04

This written as a percentage is:

1.04*100% = 104%

Which means that for each increase of one unit in the variable x, the value A(x) increases by 4%.