Question

The function V(t)=1,000(1.06)^t models the value of an investment after t years. What does the ".06" represent in the function?

Answer 1

Answer:

A

Step-by-step explanation:

Looking at the function, we have;

V(t) = 1,000(1.06)^t

Mathematically, the amount earned on an investment that offers a particular constant percentage return to a particular number of years can be written as;

V = I(1 + r)^t

where V is the value of the investment after some certain number of years

I is the initial amount invested

r is the constant percentage increase

and t is the number of years.

Let’s now re-write what we can deduce in the question.

This is;

V(t) = 1000(1 + 0.06)^t

Thus what this 0.06 represents is r which is the constant interest rate