Question

The amount of money in a saving account after t years is represented by the function f(t) = 650(1.027)

What does the value 650 represent in this situation?

The amount of money in the savings account increases by $650 each year.

The amount of money in the savings account is 650 times the amount of the previous year.

The amount of money in the savings account decreases by $650 each year.

The initial amount in the account is $650.​

Answer 1

Answer: The initial amount in the account is $650.​

Explanation:

The formula for compound interest is:

Future value = P * (1 + i)^t

Where,

P = Initial amount

i is the interest rate

t is the time period

The equation in the question takes the same format which means that the $600 is the initial amount in the account. It will then be compounded by the interest rate in the brackets over the amount of years the cash will be in that savings account.