Given the expression 500(1.025)exponent t, what does 500 represent?
I am not sure that I entirely understand this but the answer choices are:
A) Amount of Time
B) Ending Amount
C) Interest Rate
D) Starting Amount
I believe the answer is D.
I would like to know if I can get more of an explanation on this though if possible
Hello Reiny. So there is a formula for this then. I appreciate you sharing the formula with me and double checking my answer on this. I will post another 2 questions seperately and will try and show my work or my train of thought on these.
Thank you
Looks like the application of the standard compound interest formula
amount = principal(1 + i)^t
The $500 is the principal or "starting amount"
D is correct
To determine what the number 500 represents in the given expression 500(1.025)^t, let's break down the expression.
In general, the formula for compound interest is given by the formula P = P0(1 + r)^t, where:
- P is the ending amount (the value after a certain period of time)
- P0 is the starting amount (the initial value)
- r is the interest rate as a decimal (1 + interest rate in percentage divided by 100)
- t is the time or number of periods
Now, comparing it with the given expression 500(1.025)^t:
- 500 represents the starting amount (P0) in this case.
Therefore, the answer is indeed option D) Starting Amount. The value of 500 is the initial amount or the starting value before any compounding takes place.