Kumba S.

asked • 05/28/16

Finding the Rate Increase

The equation f(x) = 1,200(1.03)x models the amount of money in a savings account. At what rate per year does the money increase? (x= # of years)

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David W. answered • 05/28/16

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Kumba S.

Great, thank you David!
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05/28/16

Mark O. answered • 05/28/16

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Kumba S.

Hi Mark,
 
This is actually an Algebra I problem that I am checking for a student.
 
Thank you. 
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05/28/16

Mark O.

Is x supposed to be a power? This problem is simple if it is linear. But, if x is a power as you have it written, then you need Calculus. Can you recheck this equation?
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05/28/16

Mark O.

Actually, I'm sorry. This problem is much simpler than I am making it. That 1.03 to a power means that every year this person's money is multiplying by 1.03. At year 0, which is now, this person has f(0) = 1200(1.03)^0 = 1200. After year 1, the account has f(1) = 1200(1.03)^1 = 1236. After year 2, f(2) = 1200(1.03)^2 = 1273.08. The 1.03 in the equation simply means that every year the amount of money increases by that factor. This is the same as increasing at a growth rate of 3%. You can see this because 1.03 = 1 + 0.03.
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05/28/16

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