Question

Create an exponential to describe $100 at 2% interest, compounded annually, for x years. y=100(.98)^x y=100(.8)^x y=100(1.2)^x y=100(1.02)^x

Answer 1

The exponential to describe $100 at 2% interest, compounded annually, for x years is $y=100(1.02)^{x}$

Solution:

Given that $ 100 at 2 % interest , compounded annually for "x" years

The formula for compound interest, including principal sum, is:

$A=P\left(1+\frac{r}{n}\right)^{n t}$

A = the future value of the investment/loan, including interest

P = the principal investment amount (the initial deposit or loan amount)

r = the annual interest rate (decimal)

n = the number of times that interest is compounded per unit t

t = the time the money is invested or borrowed for

Here in this sum,

P = $ 100

$r = 2 \% = \frac{2}{100} = 0.02$

number of years = x

Here given that compounded annually , so n = 1

Let "y" be the amount after "x" years

Substituting the values in formula we get,

$\begin{aligned}&y=100\left(1+\frac{0.02}{1}\right)^{1 \times x}\\\\&y=100(1+0.02)^{x}\\\\&y=100(1.02)^{x}\end{aligned}$

Thus the exponential to describe is $y=100(1.02)^{x}$