Question

A bank account earns interest at a rate of 3.5% per year ( in other words it increases in value by that percent) and starts with a balance of $350. Which of the following equations would give the account’s worth, W, as a function of the number of years, y, it has been gaining interest?

Answer 1

Annually cumulating interest can be determined by the following formula:

$W = P(1+r)^{y}$

r represents the interest rate as a decimal, and P represents the starting amount of money.