Question

Ned opens a savings account with an interest rate of 2% per year and an initial deposit of $500.

a) The exponential model representing the amount in the savings account is:
A) A = 500 × 1.02^t
B) A = 500 + 500 × 0.02t
C) A = 500 × 0.02^t
D) A = 500 × 1.02t

b) To show the amount in the savings account each day, the model can be changed to:
A) A = 500 × 1.02^365t
B) A = 500 × 1.0002^t
C) A = 500 × 1.0002 ^365t
D) A = 500 × 1.02^t/365

Answer 1

The exponential model representing the amount in the savings account is A = 500 × 1.02^t. To show the amount in the savings account each day, the model can be changed to A = 500 × 1.0002^t.

Step-by-step explanation:

The exponential model representing the amount in the savings account is A) A = 500 × 1.02^t. In this model, A represents the amount in the savings account, 500 represents the initial deposit, 1.02 represents the multiplied factor (which is 1 plus the interest rate of 2% written as a decimal), and t represents the number of years the money is in the account.

To show the amount in the savings account each day, the model can be changed to C) A = 500 × 1.0002^t. In this model, the multiplied factor is changed to 1.0002 to account for daily compounding instead of annual compounding.