Question

A bank account earning annual compound interest was opened, and no additional deposits or

withdrawals were made after the initial deposit. The balance in the account after x years can

be modeled by b x( ) = 850(1.025)x

.

Which statement is the best interpretation of one of the values in this function?

Answer 1

Answer:2.5%

Explanation:

Answer 2

Answer: The balance in the account increases at a rate of 2.5%

Explanation:

The balance in the account after x years is modeled by

b (x) = 850(1.025)x

In another form

b(x) = 850(1 + 25%)^x

Where

850 = initial deposit

25% = Interest rate

"+" sign signifies the increase

Therefore the balance in the account increases at a rate of 2.5%