Algebra 2 Question

Question

1. Few items exist in the world that can appreciate in value like a rare diamond. The estimated value of a perfect 10 carat diamond has risen at an approximately exponential rate from about $750,000 in June 2005 to about $1,950,000 in June 2013.

1. Find an equation in the form V(t) = V01 + rt, where V0 is the value of the diamond in dollars in June 2005, r is the average annual growth rate, t is the time in years since June 2005, and Vtis the value of the diamond in dollars at time t.

1. What is the interpretation for the value of r?

1. If this trend continues, what would be the value of the diamond in June 2020?

Answer 1

Although the problem starts by describing the increase as "exponential", it asks for a linear interpretation.

Use two point form

(y - 750000) / (x - 2005) = (1950000 - 750000) / (2013 - 2005)