Question

You want to invest $1,500. Which growth curve would yield the

largest principal 5 years from now? 10 years? 20 years?
Hint: Show all the forecasts.
a. yt = 1,500e0.043t
b. yt = 1,500 + 36t
c. yt = 1,5

Answer 1

The growth curve that would yield the largest principal 5 years from now is given by equation a. yt = 1,500e0.043tb. Similarly, the largest principal 10 years from now is $2,677.77 and 20 years from now is $5,773.27.

Step-by-step explanation:

The growth curve that would yield the largest principal 5 years from now is given by equation a. yt = 1,500e0.043tb. To find the principal, we substitute t = 5 into the equation and evaluate:

yt = 1,500e0.043*5 = 1,500e0.215 = $1,768.57

Similarly, to find the largest principal 10 years from now, we substitute t = 10 into the equation:

yt = 1,500e0.043*10 = 1,500e0.43 = $2,677.77

Finally, to find the largest principal 20 years from now, we substitute t = 20 into the equation:

yt = 1,500e0.043*20 = 1,500e0.86 = $5,773.27