Question

Tim deposits money in a certificate of deposit account. The balance (in dollars) in his account t years after making

the deposit is given by T(t) = 1000(1.06)t for t ≥ 0
c. By what percentages does the value of T(t) grow every two years? (Hint: Use your recursive formula to write
T(n + 2) in terms of T(n).)

Answer 1

12.36%

Explanation:

For year 1:

T(1) = 1000(1.06)¹

T(1) = 1060

After two years, t = 3

T(3) = 1000(1.06)³

T(3) = 1191.06

The percent of the increase is

[(T(3) - T(2)/T(2)]*100%

[(1191.06 - 1060)/1060]*100%

12.36%