The future value of Sarah's certificate of deposit (CD), for the first five years, is represented by the sequence below. The applied interest is compound interest.

$255.00, $260.10, $265.30, $270.61, $276.02, ...

A. True
B. False

Question

The future value of Sarah's certificate of deposit (CD), for the first five years, is represented by the sequence below. The applied interest is compound interest.

$255.00, $260.10, $265.30, $270.61, $276.02, ...

 		A.	True
 		B.	False

anonymous · Answer

@AihberKhan

aihberkhan · Answer

Okay. So we need to realize that compounded interest is exponential. 

Lets look at the change that is in the value for each increase in a year. The thing is linear with a slope of $7.5$ dollars per year.

anonymous · Answer

False?

anonymous · Answer

it should be 262.5?

aihberkhan · Answer

This is the form for the compounding interest: $y = A(x)^n$

And the thing has the form $y = mx + b$

anonymous · Answer

i dont understand

aihberkhan · Answer

Well each number is a different of about $5$. That is arithmetic. And if it is exponential than it is false.

aihberkhan · Answer

Not sure how to explain it perfectly... so look at this: http://openstudy.com/updates/54d2c73de4b077c272e2db7a