Question

Yui makes a list of the balances in her savings account at the end of each month. She notices that each month’s total is 5% greater than the previous month’s total. She writes a recursive formula to describe the account balances.

Which value should she use as the common ratio?

0.05
0.5
1.05
5.0

Answer 1

1.05

Each month the balance is multiplied by 1 + 0.05 = 1.05 (a 5% increase).