Question

Lee owns a business earning $25,400 in profits. These profits are appreciating at about 1.9% each year. What are Lee's profits after seven years?

Answer 1

Divide 1.9% from $25,000 and multiply the answer by 17 and add it to $25,000

Answer 2

$28,976.97

Explanation:

We have been given that Lee owns a business earning $25,400 in profits. These profits are appreciating at about 1.9% each year.

We will represent this information in exponential function
`y=a\cdot (1+r)^x`, where,

a = Initial value,

r = Growth rate in decimal form.

`1.9\%=(1.9)/(100)=0.019`

Substitute the given values:

`y=\$25,400\cdot (1+0.019)^7`

`y=\$25,400\cdot 1.140825678563294`

`y=\$28,976.9722355`

`y\approx \$28,976.97`

Therefore, Lee's profits after seven years would be $28,976.97.