Lesson 4: Exponential Growth and Decay — Practice Questions

1. 1. An initial investment of $5000 earns 5% interest compounded annually. What is the total amount in the account after 2 years? Round to the nearest cent. ___ dollars

2. 2. Which expression represents the value of a $3000 investment after 10 years with an annual interest rate of 7%?

   • A. $3000(1.7)^{10}$
   • B. $3000(1.07)^{10}$
   • C. $3000(1 + 0.07)(10)$
   • D. $10(1.07)^{3000}$

3. 3. If you deposit $1200 into a savings account that pays 3% interest compounded annually, how much money will be in the account after 4 years? Round to the nearest cent. ___ dollars

4. 4. In the compound interest formula $A = P(1 + r)^n$, what does the base of the exponent, $(1 + r)$, represent?

   • A. The principal
   • B. The annual growth factor
   • C. The total interest earned
   • D. The number of years

5. 5. A principal of $2000 is invested at a rate of 2.5% compounded annually. Calculate the total amount after 6 years. Round to the nearest cent. ___ dollars

6. 6. Which of the following functions represents exponential decay?

   • A. $f(x) = 10 \cdot (1.1)^x$
   • B. $g(x) = 0.5 \cdot (3)^x$
   • C. $h(x) = 25 \cdot (0.9)^x$
   • D. $k(x) = 150 \cdot (5/4)^x$