Question

Which of the following is a reasonable interpretation of the expression 500(1 + 0.325)t in this context?

Answer 1

We can note that the last expression

`500(1+0.0325)^t`

comes from the compound interest formula,

`A=P(1+(r)/(n))^(n\cdot t)`

Where A is the future value, P is the initial amount, r is the rate, n the amount of times the interest is compounded per time period and t denotes the years. In our case, P=500, r=0.0325, n=1. Therefore, the given expression will give us the future amount of money after t years. Then, the answer is the second option from top top to bottom