Question

Compound interest . A student get a grant of $10000 a year assuming her grant is increased by 7% each year what will her grant be in four years time

Answer 1

Her grant in four years time will be of $13108.

Explanation:

Exponential equation:

An exponential equation has the following format:

`A(t) = A(0)(1+r)^t`

In which A(0) is the initial value and r is the growth rate, as a decimal.

A student get a grant of $10000 a year assuming her grant is increased by 7% each year

This means that
`A(0) = 10000, r = 0.07`

So

`A(t) = A(0)(1+r)^t`

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

`A(t) = 10000(1.07)^t`

What will her grant be in four years time?

This is A(4). So

`A(t) = 10000(1.07)^t`

`A(4) = 10000(1.07)^4 = 13108`

Her grant in four years time will be of $13108.