Question

josiah invests $360 into an account that accrues 3% interest annually. assuming no deposits or withdrawals are made, which equation represents the amount of money in josiah’s account, y, after x years?
$y = 360(0.03)^x$
$y = 360(1.03)^x$
$y = 360(0.3)^x$

Explanation:

Step1: Recall compound interest formula

The standard formula for annual compound interest (with no additional deposits/withdrawals) is $y = P(1 + r)^x$, where $P$ is principal, $r$ is annual interest rate, $x$ is time in years, and $y$ is final amount.

Step2: Identify given values

$P = 360$, $r = 0.03$ (3% converted to decimal)

Step3: Substitute values into formula

Substitute $P$ and $r$ into the formula: $y = 360(1 + 0.03)^x = 360(1.03)^x$

Answer:

$y = 360(1.03)^x$