Question

The value of a 1970 comic book has increased 12% per year. It originally sold for $0.35. Write an exponential equ Show your work.ation that models this situation and use it to answer the question.

Answer 1

we can think of this as the same as a deposit in a bank, so let's use the compound interest formula, since the book is increasing in value 12% per annum.

$\bf ~~~~~~ \textit{Compound Interest Earned Amount} \\\\ A=P\left(1+\frac{r}{n}\right)^{nt} \quad \begin{cases} A=\textit{accumulated amount}\\ P=\textit{original amount deposited}\dotfill &\ 0.35\\ r=rate\to 12\%\to \frac{12}{100}\dotfill &0.12\\ n= \begin{array}{llll} \textit{times it compounds per year}\\ \textit{per annum, thus once} \end{array}\dotfill &1\\ t=years\dotfill &t \end{cases} \\\\\\ A=0.35\left(1+\frac{0.12}{1}\right)^{1\cdot 5}\implies A=0.35(1.12)^t$