A 5000 bond increased in value by 42 percent each year Deter

A $5,000 bond increased in value by 4.2 percent each year. Determine the 1-year growth factor: Determine the 1-decade percent change: Determine the initial value: Define a function g that gives the value of the bond t years after the bond was purchased.

Solution

a) 1-year growth factor = 1.042

b) After 1 -decade

N = 5000*(1.042)^10 = $7544.8

% change = 50.9%

c) Initial value = $5000

d) f(t) = 5000*(1.042)^t