Question

An investment is initially worth $10,000. Write a formula for the value of this investment for each situation described below.

Answer 1

Using the compound interest formula:

The value increases by 7% every year:

`V(t)=10000(1+0.07)^t`

The value increases by 7% every 3 years:

`V(t)=10000(1+0.07)^{(t)/(3)}`

The value increases by 7% every six months:

`V(t)=10000(1+(0.07)/(2))^(2t)`