Question

The function h(x) = 5000 multiplied by (1.08)^x represents a loan taken out by a college student. x represents time in years. Is the cost of the loan increasing or decreasing as time goes on and by what percentage per year does it do so?

Answer 1

The cost of the loan is increasing as time goes by.

Exponential function

The standard exponential function is expressed as:

y = ab^x

b is the rate of the function

The value of  b depends on the increase or decrease in the rate

Since the value of b in the function 5000(1.08)^x is greater than 1, hence the the cost of the loan is increasing as time goes by.

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