Question

A savings account compounds interest, at a rate of 25%, once a year. Eve puts $500 in the account as the principal. How can Eve set up a function to track the amount of money she has? (1 point)

Select one:
a. A(x) = 500(25)x where 25 is the interest rate
b. A(x) = 500(.25)x where .25 is the interest rate
c. A(x) = 500(1 + 25)x where 25 is the interest rate
d. A(x) = 500(1 + .25)x where .25 is the interest rate

Answer 1

D. A(x) = 500 (1+.25)x where .25 is the interest rate

Explanation:

I just passed the test.

Answer 2

Year 1: 500 + 0.25*500 = 500 [1 + 0.25]

Year 2: 500*[ 1 + 0.25] * [1 + 0.25] = 500 [1 + 0.25]^2

Year x: 500 [1 + 0.25]^x

Option d: A(x) = 500[1 + .25]^x, where .25 is the interest rate