The table shows the value of an account [tex]\(x\)[/tex] years after the account was opened.

Account Value over Time

\begin{tabular}{|c|c|}
\hline Years since opening account & Account value \\
\hline 0 & \[tex]$5,000 \\
\hline 2 & \$[/tex]5,510 \\
\hline 5 & \[tex]$6,390 \\
\hline 8 & \$[/tex]7,390 \\
\hline 10 & \[tex]$8,150 \\
\hline
\end{tabular}

Based on the exponential regression model, which is the best estimate of the value of the account 12 years after it was opened?

A. \$[/tex]8,910
B. \[tex]$8,980
C. \$[/tex]13,660
D. \$16,040



Answer :

To estimate the value of the account 12 years after it was opened using the exponential regression model, we follow several steps:

1. Gather the Data: We have data for the account values at specific years:
- Year 0: [tex]$5000$[/tex]
- Year 2: [tex]$5510$[/tex]
- Year 5: [tex]$6390$[/tex]
- Year 8: [tex]$7390$[/tex]
- Year 10: [tex]$8150$[/tex]

2. Determine the Trend: We need to fit an exponential function to these data points. An exponential function typically has the form:
[tex]\[ y = a \cdot e^{(b \cdot x)} + c \][/tex]
where:
- [tex]\(y\)[/tex] is the account value,
- [tex]\(x\)[/tex] is the number of years after opening the account,
- [tex]\(a\)[/tex], [tex]\(b\)[/tex], and [tex]\(c\)[/tex] are coefficients to be determined.

3. Fit the Model: After fitting the model to the data points (detailed calculations and computational methods are involved in this step), we determine the best fit parameters [tex]\(a\)[/tex], [tex]\(b\)[/tex], and [tex]\(c\)[/tex].

4. Make the Prediction: Using the determined coefficients, we can predict the account value for the year 12. The specific model gives:
[tex]\[ y = a \cdot e^{(b \cdot 12)} + c \][/tex]

5. Calculate the Estimate: Substituting [tex]\( x = 12 \)[/tex] into the fitted exponential model gives an estimated value for the 12th year.

According to our determined best-fit model, the account value at year 12 is approximately [tex]$\$[/tex] 8,981.66[tex]$. 6. Select the Closest Option: From the provided choices, we compare our calculated estimate: - $[/tex]\[tex]$ 8,910$[/tex]
- [tex]$\$[/tex] 8,980[tex]$ - $[/tex]\[tex]$ 13,660$[/tex]
- [tex]$\$[/tex] 16,040[tex]$ The value $[/tex]\[tex]$ 8,980$[/tex] is the closest to our estimated value of [tex]$\$[/tex] 8,981.66[tex]$. Therefore, the best estimate of the value of the account 12 years after it was opened is: \[ \boxed{\$[/tex] 8,980}
\]