Alexis invests $475 in a bank account that earns 1.25% interest compounded annually. Which function models the growth of her investment over x years?

Accepted Solution

Answer: The function that modes this situation would be: y = 475(1 + .0125)^x.

This is an example of an exponential equation. These equations are always in the form y = ab^x.

The a value is the starting value. The b value is the interest rate. The x value is the number of years.

The only thing to be careful about is the rate. We are adding 1.25% or 0.125. Make sure that you are adding 1 whole to the 1.25% and don't just use 0.125.