O .
Suppose that you want to save money and would like to find a savings option that earns you the most
money in interest. You have $1000 to put towards savings. After surveying several banks for savings
plans, you found these options. "A" represents the amount you will have in the bank after x years.
Option A: Your money would receive simple interest at the end of 5 years.
The formula is: A = 1000 + 1000(0.05)x
Option B: Your money will be compounded continuously.
The formula is: A = 1000(2.71828)(0.05x)
Option C: You will invest in a CD (Certificate of Deposit) compounded yearly.
o The formula is: A = 1000(1.05)*
Option D: You buy a US Savings Bond.
The savings bond costs $1000 now. When cashed in 5 years later, the amount will be
$1267. You must leave the money in the savings bond for 5 years to earn any interest.
But, you do not receive any additional interest if you leave it in longer than 5 years.
O
1. Each option represents a function. State the type of function (linear, exponential, or "other")
described by each of the options. Explain your answers. (2 points)
2. Determine the value of each option at the end of 5 years. (2 points each; 8 points total)
Option A
Option B
Option
Option D