Each year, the value of an investment increases by 0.49 % of its value the previous year. Which of the

Question

Each year, the value of an investment increases by 0.49 % of its value the previous year. Which of the following functions best models how the value of the investment changes over time?

Accepted Answer

Choice C is correct. Because the value of the investment increases each year, the function that best models how the value of the investment changes over time is an increasing function. It&prime;s given that each year, the value of the investment increases by 0.49 % of its value the previous year. Since the value of the investment changes by a fixed percentage each year, the function that best models how the value of the investment changes over time is an exponential function. Therefore, the function that best models how the value of the investment changes over time is an increasing exponential function. Choice A is incorrect and may result from conceptual errors. Choice B is incorrect and may result from conceptual errors. Choice D is incorrect and may result from conceptual errors.

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