Question

Which expression shows the value of a $2500 investment after it has grown by 4.5% per year for 12 years. A- 2500(1.045)^12

B- 2500(1.045)^144
C- 2500(1.45)^12
D- 2500(1.45)^144

Answer 1

The answer is A. 2500(1.045)^12

This is explained by the formula A(t) = a(1+- r)^t.
+ for growth
- for decay
t for time

Since this is growth (the word 'grown' in the question gives us an idea), we add 1 to the rate 0.045.