Question

Suppose the amount of money in a bank account with an initial balance of $8,000 earns 2.5 percent interest per year. If the exponential function, y=A*B^x , is used to model this situation, which value would represent B in the function?

Answer 1

what is 2.5% in decimal form ? that is 0.025

B = 1 + 0.025 = ? 1.025 is your asnwer

Answer 2

The value of B is 1.025.

Explanation:

Given information:

Initial balance = $8000

Interest rate = 2.5% per year = 0.025

The general form of exponential function is

`y=AB^x` .... (1)

where, A is initial value and B is growth factor.

It can also written as

`y=A(1+r)^x` ... (2)

From (1) we get

`B=1+r=1+0.025=1.025`

Therefore the value of B is 1.025.