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
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.