Question

The balance of an account after t years can be found using the expression 6000(1.02)^t where the initial balance was $6000. By what percent does the account increase annually? a 1.02% b 102% c 0.02% d 2%

Answer 1

9514 1404 393

Answer:

(d) 2%

Explanation:

The base of the exponent is the "growth factor". It is 1 more than the "growth rate", the fraction of change in 1 year.

growth factor = 1 + growth rate

1.02 = 1 + 0.02

growth rate = 0.02 = 2%

The account increases 2% annually.