Question

You invest $1000 in a certificate of deposit (CD) that earns 5% interest every year. If the function that represents growth of your money is f(x)=1.05x, in what year will your CD be at least worth $1,300

Answer 1

Answer: Year 6

Step-by-step explanation: The year my money would be at least $1300 is year 6.

In what year would the money be at least $1300?

The formula that can be used to determine the number of years that $100 would have a value of $1300 is:

Number of years = In(FV / PV) / r

Where:

FV = future value

PV = present value

r = interest rate

In(1300 / 1000) / 0.05

0.2623642645 / 0.05

= 5.2 years

Future value in 5 years = $1000(1.05^5) = $1276.28

Future value in 6 years = $1000(1.05^6) = $1340.10