Question

If $7500 is invested at an interest rate of 5% each year, what is the value of the investment in 4 years? Write an exponential function and solve. a. ;$7859.91 b. ;$32,153.20 c. ;$9116.30 d. ;$6170.27

Answer 1

Answer: (c) The value of the investment in 4 years will be $9116.30

Explanation:

5% growth rate corresponds to an annual multiplier (1+0.05)=1.05 (to be applied to the investment amount) - this will be the base of the exponential function for the value V after n years:

`V(n) = 7500\cdot1.05^n\\V(4)=7500\cdot 1.05^4\approx\$9116.30`