Question

Could someone please help me I dont understand and I don't know what the answer is?

Answer 1

`A=1500(1.00167)^(12t)`

Explanation:

If t is the number of years, then 12t is the number of months interest is compounded. The interest rate (growth rate) used each month is 1/12 of the annual rate, so is

monthly growth rate = 2%/12 ≈ 0.167% = 0.00167

Then the monthly growth factor is ...

monthly growth factor = (1 + monthly growth rate) = 1.00167

The overall account value is the initial value multiplied by this growth factor a number of times equal to the number of months, 12t. Repeated multiplication is indicated by an exponent:

A = 1500(1.00167)^(12t) . . . . . . . matches the last choice