Originally Posted by

**mt_lapin** A person invests $7000 at 10% interest compounded annually. Let $\displaystyle f(t)$ be the value (in dollars) of the account at *t* years after he/she has deposited the $7000.

a. Find an equation of *f*.

My answer: $\displaystyle f(t)=7000(1.10)^t$

b. What is the base *b* of your model $\displaystyle f(t)=ab^t$? What does it mean in this situation?

My answer: 1.10; the account balance increases by 10% each year.

c. What is the coefficient *a* of $\displaystyle f(t)=ab^t$? What does it mean in this situation?

My answer: 7000; the initial amount invested was $7000.

d. What will be the account's value in 10 years? **Explain why the value has more than doubled, even though the investment earned 10% for 10 years. **

My answer: For the first part I got $18156. **But what would be the explanation? ** That I don't get...