The value of an investment, in dollars, after t years is modeled by V(t) = 5000(1.06)^t. According to this model, by what percent does the…

In an exponential model $V(t) = V_0 b^t$, the base $b$ is the growth factor per year. Here $b = 1.06 = 1 + 0.06$, so each year the value is multiplied by 1.06, an increase of 6%. That is choice B. Choice A (106%) is the percent of the previous value that remains, not the increase. Choice C (1.06%) misreads the decimal as a percent. Choice D (60%) shifts the decimal point the wrong way. Subtract 1 from the base and convert the decimal to a percent: $0.06 = 6\%$.