Question

1900 is deposited into a savings account. Interest is compounded annually. After 1 year, the value of the account is 1957. After 2 years, the value of the account is 2015.71. This scenario can be represented by an exponential function of the form f(x)=1900(b)^2 , where is the amount in the savings account, and x is time in years. What is the value of b?

Answer 1

1.03

Explanation:

2015.71 = 1900(b)^2

44.896659 = 43.588989 * b

44.896659/ 43.588989 = b

1.0300000 = b

Recall ; for an exponential distribution :

b In the equation = 1 + r ; where, r = rate

b = 1 + r

1.0300000 = 1 + r

r = 1.0300000 - 1

r = 0.03

Hence, the value of b in the equation is 1.03