Chapter 7.7, Problem 40PFA

To determine

An equation, $v=8000{(1.03)}^t$ describes the value of desk after t years and we have to choose correct option from given options which best describes the meaning of 1.03 in the equation.

Answer to Problem 40PFA

The correct option is “C”.

Explanation of Solution

The given equation $v=8000{(1.03)}^t$ , can also be expressed as

  $v=8000{(1+0.03)}^t$

$v=8000{\left(1+\frac{3}{100}\right)}^t$

The above formulae is like of compound interest, which can be expressed as,

  $Amount=\mathrm{Principal}{\left(1+\frac{rate\text{ of interest(R)}}{100}\right)}^{timetaken(T)}$

Here R is the rate at which amount increases at R% every year.

And the best meaning of the 1.03 in given equation is that the value of desk(v) is increases at the rate of 3% each year.