Question

Levi's investment account accrues interest biannually. The function below represents the amount of money in his account if the account is left untouched for

t years.
f(t) = 2000 (1.03)2t

The amount of money in the account ( increases or decreases )

by (2 , 3 or 103)

% (every six months, each year, or every two years)

Answer 1

The amount of money in the account increases by 3% every six months, or biannually.

To see why, we can break down the function f(t) = 2000(1.03)^(2t):

• The base amount in the account is $2000.

• The term (1.03)^(2t) represents the interest accrued over time.
  

Since the interest is compounded biannually, the exponent of 2t indicates the number of six-month periods that have elapsed. For example, if t = 1, then 2t = 2, which means two six-month periods have elapsed (i.e., one year).

Each time 2t increases by 2, the base amount is multiplied by (1.03)^2, which represents the interest accrued over the two six-month periods.

Thus, the amount of money in the account increases by 3% every six months, or biannually.

As for the second part of the question, the amount of increase is not 2%, 3%, or 103%.