Question

Justin has $200 in a bank account that earns 3% in annual interest. Does this describe a linear or exponential function? Select the equation.

Answer 1

Justin has $200 in a bank account that earns 3% in annual interest.

This can be modeled using an exponential function given by

$f(x)=P(1+r)^x$

Where P is the invested amount, r is the interest rate in decimal, and x is the number of years.

For the given case,

P = $200

r = 3% = 0.03

So, the exponential function becomes

$\begin{gathered} f(x)=200(1+0.03)^x \\ f(x)=200(1.03)^x \end{gathered}$

Therefore, the given situation describes an exponential function.

$Exponential\colon f(x)=200(1.03)^x$