A person invests $7000 at 10% interest compounded annually. Let
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:
b. What is the base
b of your model
? 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
? 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...