The equation $B = 500(1.1)^y$ is an exponential function with an annual interest rate of 10%.

• The base of $1.1$ represents a 10% increase each year (since $1.1 = 1 + 0.1$, where $0.1$ corresponds to 10%).

Would you like more details or have any questions?

Here are 5 questions that could help deepen your understanding:

1. What is the general form of the compound interest formula?
2. How does the initial value of 500 affect the graph of this exponential function?
3. What happens to the balance if the interest rate changes to 5%?
4. Can you explain the difference between simple interest and compound interest?
5. How would the function change if the interest were compounded monthly instead of annually?

Tip: When dealing with compound interest, the frequency of compounding (annually, monthly, etc.) significantly affects the total amount accumulated over time.