\(f(x)=1250\times(1.08)^x\to\) (1)

where x represent the number of years.

The formula for exponential growth of a variable 'y' at the growth rate r, as time x goes on indiscrete intervals (that is, at integer times 0,1,2,3,...), is \(y_x=y_0(1+r)^x\to\) (2) where \(y_0\) is the value of y at time 0.

a) On comparing (1) and (2) we have

\(1.08=1+r\)

\(\therefore r=1.08-1\)

\(r=0.08=\frac{8}{100}=8\%\)

Therefore rate of growth =8% per year

b) 1250 represents the amount of money invested at time x=0

That is the initial amount invested in the bond fund.