Question

The equation A= 1300(1.02) is being used to calculate the amount of money in a savings account. What does 1.02 represent in this equation?1. 0.02% decay 2. 0.02% growth 3. 2% decay 4 . 2% growth

Answer 1

We are given the following equation:

$A=1300(1.02)^t$

This is an equation of the form:

$A=A_0(1+b)^t$

Where "b" represents the growth rate in decimal form. This means that in the equation we are given:

$1+b=1.02$

Solving for "b" we get:

$\begin{gathered} b=1.02-1 \\ b=0.02 \end{gathered}$

Therefore, the growth rate is 2%.