Question

Lee owns a business earning $25,400 in profits. These profits are appreciating at about 1.9% each year. What are Lee's profits after seven years?

Answer 1

Divide 1.9% from $25,000 and multiply the answer by 17 and add it to $25,000

Answer 2

Answer:

$28,976.97

Step-by-step explanation:

We have been given that Lee owns a business earning $25,400 in profits. These profits are appreciating at about 1.9% each year.

We will represent this information in exponential function $y=a\cdot (1+r)^x$, where,

a = Initial value,

r = Growth rate in decimal form.

$1.9\%=\frac{1.9}{100}=0.019$  

Substitute the given values:

$y=\ 25,400\cdot (1+0.019)^7$  

$y=\ 25,400\cdot 1.140825678563294$  

$y=\ 28,976.9722355$  

$y\approx \ 28,976.97$  

Therefore, Lee's profits after seven years would be $28,976.97.