What amount do you pay each month for a loan of $8000 at a rate of 2% across 6 years?
1 answer:
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Answer:
A) 3%
B) Product A
Step-by-step explanation:
<u>Exponential Function</u>
General form of an exponential function:
where:
- a is the initial value (y-intercept)
- b is the base (growth/decay factor) in decimal form
- x is the independent variable
- y is the dependent variable
If b > 1 then it is an increasing function
If 0 < b < 1 then it is a decreasing function
<u>Part A</u>
<u>Product A</u>
Assuming the function for Product A is <u>exponential</u>:
The base (b) is 1.03. As b > 1 then it is an <u>increasing function</u>.
To calculate the percentage increase/decrease, subtract 1 from the base:
⇒ 1.03 - 1 = 0.03 = 3%
Therefore, <u>product A is increasing by 3% each year.</u>
<u>Part B</u>
To calculate the percentage change in Product B, use the percentage change formula with two consecutive values of f(t) from the given table:
Check using different two consecutive values of f(t):
Therefore, as 3% > 1%, <u>Product A recorded a greater percentage change</u> in price over the previous year.
Although the question has not asked, we can use the given information to easily create an exponential function for Product B.
Given:
- a = 10,100
- b = 1.01
- n = t - 1 (as the initial value is for t = 1 not t = 0)
To check this, substitute the values of t for 1 through 4 into the found function:
As these values match the values in the given table, this confirms that the found function for Product B is correct and that <u>Product B increases by 1% per year.</u>