Question

Given an exponential function for compounding interest, A(x) = P(1.03)x, what is the rate of change?

0.03%
1.03%
3%
103%

Answer 1

Compound interest function is: \(\bf{A=P(1+\frac{r}{n})^{nt}}\) this means that the decimal of the rate is added with one.

\(\bf{1.03 - 1 = .03}\)

\(\bf{.03 \rightarrow 3~percent}\)