Question

What is the annual compound interest rate for an investment account modeled by the function y=12⋅1.18t ?

Answer 1

Answer:

The interest rate for the given investment is 18%.

Step-by-step explanation:

We are given that,

The function representing the investment model is, $y=12(1.18)^t$.

It is required to find the interest rate for the investment.

Since, the function can be re-written as,

$y=12(1.18)^t$

i.e. $y=12(1+0.18)^t$

So, on comparing with the formula for compound interest i.e. $A=P(1+r)^t$, where 'r' is the interest rate.

We have that,

The interest rate for the given investment is 0.18 i.e. 18%.