Question

Sophia invested some money in a bank at a fixed rate of interest compounded annually. The equation below shows the value of her investment after x years f(x) = 500(1.05)x. What was the average rate of change of the value of Sophia's investment from the second year to the fourth year? a. 14.13 dollars per year b. 28.25 dollars per year c. 50.00 dollars per year d. 56.50 dollars per year

Answer 1

f ( 2 ) = 500 * 1.05^2 = $551.25
f ( 4 ) = 500 * 1.05^4 = $607.75
The average rate of change from the 2nd year to the 4th year:
( 607.75 - 551.25 ) : 2 = 28.25
Answer: B ) 28.25 dollars per year