Jayden opens a savings account and deposits $100. If his annual interest rate is 4%, write an exponential function to model the situation. What is the exponential growth/decay factor? (b value)

1 answer

To model the situation of Jayden's savings account, we can use the formula for exponential growth:

\[ A(t) = A_0(1 + r)^t \]

Where:

  • \( A(t) \) is the amount of money in the account after time \( t \),
  • \( A_0 \) is the initial amount of money (the initial deposit),
  • \( r \) is the annual interest rate (as a decimal),
  • \( t \) is the time in years.

In this case:

  • \( A_0 = 100 \) (the initial deposit),
  • \( r = 0.04 \) (4% as a decimal).

Substituting these values into the formula, we get:

\[ A(t) = 100(1 + 0.04)^t \] \[ A(t) = 100(1.04)^t \]

The exponential function that models the situation is:

\[ A(t) = 100(1.04)^t \]

Now, the exponential growth factor (the \( b \) value) in this function is:

\( b = 1.04 \)

This means that for each year that passes, the amount in the account increases by a factor of 1.04.