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Suppose the amount of money in a bank account with an initial balance of $8,000 earns 2.5 percent interest per year. If the exponential function, y=A*B^x , is used to model this situation, which value would represent B in the function?

Verified Answer :

arie01

what is 2.5% in decimal form ? that is 0.025

B = 1 + 0.025 = ?  1.025 is your asnwer

Answer:

The value of B is 1.025.

Step-by-step explanation:

Given information:

Initial balance = $8000

Interest rate = 2.5% per year = 0.025

The general form of exponential function is

\(y=AB^x\)          .... (1)

where, A is initial value and B is growth factor.

It can also written as

\(y=A(1+r)^x\)       ... (2)

From (1) we get

\(B=1+r=1+0.025=1.025\)

Therefore the value of B is 1.025.

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