A bank account earning annual compound interest was opened, and no additional deposits or withdrawals were made after the initial deposit. The balance in the account after x years can be modeled by b (x) = 850 (1.025) x.

Which statement is the best interpretation of one of the values in this function?

The balance in the account at the end of one year is $850.

The initial balance of the account decreases at a rate of 97.5% each year.

The balance in the account increases at a rate of 2.5% each year.

The initial balance of the account was $1,025.

Question

Krish White

Mathematics

13 May, 12:20

A bank account earning annual compound interest was opened, and no additional deposits or withdrawals were made after the initial deposit. The balance in the account after x years can be modeled by b (x) = 850 (1.025) x.

Which statement is the best interpretation of one of the values in this function?

The balance in the account at the end of one year is $850.

The initial balance of the account decreases at a rate of 97.5% each year.

The balance in the account increases at a rate of 2.5% each year.

The initial balance of the account was $1,025.

+1

Answers (1)

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Curry · Answer 1

The balance in the account increases at a rate of 2.5% each year.

Step-by-step explanation:

b (x) = 850 (1.025) x

Here, x is the time in years.

Let x be 1year

b (1) = 850 (1.025) (1)

= 871.25

The initial amount is $850

Interest = $21.25

Rate = (21.25/850) 100

= 2.5

Rate = 2.5%

The balance in the account increases at a rate of 2.5% each year.