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?


The balance in the account at the end of one year is $850.

The initial balance of the account decreases at a rate of 97.5% each year.

The balance in the account increases at a rate of 2.5% each year.

The initial balance of the account was $1,025.

Answer 1

The balance in the account increases at a rate of 2.5% each year.

Step-by-step explanation:

b(x) = 850(1.025) x

Here, x is the time in years.

Let x be 1year

b(1) = 850(1.025) (1)

= 871.25

The initial amount is $850

Interest = $21.25

Rate = (21.25/850) 100

= 2.5

Rate = 2.5%

The balance in the account increases at a rate of 2.5% each year.

Answer 2

The balance in the account increases at a rate of 2.5% each year.

What is an exponential function?

An exponential function has the form : y = a^x

Where:

y = dependent variable

a = independent variable

x = rate of increase

In an exponential function, the dependent variable increases by a certain number.

What is the future value of the account?

The formula for calculating future value:

FV = P (1 + r)^n

• P = beginning balance = $850
• r = Interest rate = 2.5%
• x = number of years.

To learn more about future value, please check: https://brainly.com/question/18760477