Question

Holly deposited $10,000 in an investment account. After 6 years the account is worth approximately $13,400. Which formula represents the value of the account after t years? A) V = 10,000(1.04)t B) V = 10,000(.05)t C) V = 10,000(1.05)t D) V = 10,000(.04)t

Answer 1

Formula for exponential growth is:

A = P(1+r)^t

Where A is the resulting amount, P is the initial value, r is the rate, and t is the time passed.

Filling this out for this situation gets you:

13400 = 10000(1+r)^6

Solving for r:

Divide 13400 by 10000

1.34 = (1+r)^6

Take the 6th root of both sides...
1 + r = 1.05

No more work is needed, since you aren’t solving for r.

Full equation:
V = 10000(1.05)^t
Answer C is correct