Question

Given an exponential function for compounding interest, A(x) = P(1.04)x, what is the rate of change?

A. 0.04%
B. 1.04%
C. 104%
D. 4%

Answer 1

The given expression is

`A(x) = P(1.04)^x`

Which can also be written as

`A(x) = P(1+0.04)^x`

And the formula of compound interest is

`A(x) = P(1+r)^x`

On comparing, we will get rate of change equals to 0.04 or 4 %.

So the correct option is the last option .