Question

The general form for a compound interest function is B(t)=P(1+r/n)^nt . Assuming that n=1 , rewrite the compound interest equation B(t)=900(1.185)^t  in the general form. Using your rewritten equation, what is the percent rate of change?

Answer 1

The formula
`B(t)=P(1+(r)/(n))^(nt)`, for n=1 becomes
`B(t)=P(1+(r)/(1))^(1\cdot t)=P(1+r)^t`.

Comparing
`B(t)=P(1+r)^t` with
`B(t)=900(1.185)^t`, we see that

P=900, and 1+r=1.185, which means that r=0.185.


r=0.185 can be written as 18.5%, as a percentage.


Answer: 18.5%