Question

The table shows the balance of an investment account at the beginning of each year the account was held. Assuming that no other deposits have been made to the account, which statement describes the accounts growth?

Year Account Balance
1 $500.00
2 $510.00
3 $520.20


A. The account is growing linearly at an annual interest rate of 4.04%

B. The account is growing exponentially at an annual interest rate of 4.04%

C. The account is growing linearly at an annual interest rate of 2.00%

D. The account is growing exponentially at an annual interest rate of 2.00%

Answer 1

• Answer: OPTION (C):

Hence, OPTION (C): The account is growing linearly at an annual interest rate of 2.00%

• Step-by-step explanation Make A Plan:

Calculate the Growth Rate between each year and determine if the growth is linear or exponential:

• SOLVE THE PROBLEM:

(1) - Calculate the growth rate between Year One (1) and Year (2):

(510 - 500 ) / 500 = 0.02

= 2%

• (2) - Calculate the growth rate between Year (2) and Year (3):

(520.20 - 510 ) / 510 = 0.02

= 2%

• (3) - Check if the growth rate is Linear or Exponential:

Since, The Growth Rate is Constant, The Account is Growing Linearly. at an Annual Interest Rate of 2.00%, Hence, the correct answer is

OPTION (C).

• Draw the conclusion:

Hence, OPTION (C): The account is growing linearly at an annual interest rate of 2.00%

I hope this helps you!