Question

Cressida decided to save a part of her income in a savings account that compounds interest every four months. Her account balance after t years can be given by the following expression.

3,545(1.045)^3t

What does the value 3 in the exponent represent?

A.
the growth factor that reveals the rate at which the account balance increases
B.
the number of times the account compounds interest
C.
the initial amount invested
D.
the amount saved each year

Answer 1

A

Explanation:

account balance on compound interest = principal amount (1+rate/100)^time

here there are t years so toat months are 12t and ad interest is after each 4 months so time is 12t/4 =3t

now total balance = 3545(1.045)^3t

here 3545 is principal amount , rate is( 1.045-1)×100 =4.5% per 4 months and 3t is time so clearly 3t or 3 is a growth factor hence option A

Answer 2

B.

Explanation:

3 in the exponent means the number of times interest is added each year (every 4 months).