Question

a. Nick deposits money in a Certificate of Deposit account (CD). The balance (in dollars) in his account t years after making the deposit is given by N(t)=400(1.06)tfor t ≥ 0. Explain, in terms of the structure of the expression for N(t), why Nick's balance can never be $399.

Answer 1

(1.06)0 = 1 and positive powers of 1.06 are larger than 1, thus the minimum value N(t) attains, if t≥0, is 400.

From the point of view of the context, a CD account grows in value over time so with a deposit of $400 the value will never drop to $399.