An exponential function will always involve putting the independent variable
—usually time—into the exponent part of the function. For example, f (x) = 2x is
a very simple exponential function. Try plugging in some values of x and you
can see how quickly f (x) rises to astronomical levels. However, most
exponential growth problems on the SAT will involve financial situations, not
astronomy. Behold:
If Jita invests $2,500 in a savings account that earns 2% interest per year,
how much money will she have in three years?
There is a right way to do the problem, and a wrong way. The wrong way is
to think: Hmm, she’s getting 2 % per year, so I’ll just multiply 2 % times 3, and
multiply the result by the original investment of $2,500. This would be incorrect.
And likely one of the answer choices will correspond to this method because the
Serpent is hoping you will make this logical, but wrong, attempt.
To answer this correctly, you should memorize the compound interest
formula:
In this formula, A is the total amount accumulated, P is the principal or
starting amount, r is the growth rate (expressed as a decimal), and t is the
number of years invested. The n is a little more complicated. It’s the number of