Question

1. Jeremy has $12000 cash to invest in the bank compounded at 4% interest annually.

a.
What equation will calculate the value in x years? y =

Answer 1

`A(x) = 12000(1.04)^x`

Explanation:

Compound interest:

The compound interest formula is given by:

`A(t) = P(1 + (r)/(n))^(nt)`

Where A(t) is the amount of money after t years, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per year and t is the time in years for which the money is invested or borrowed.

$12000 cash

This means that
`P = 12000`

Compounded at 4% interest annually.

This means that
`r = 0.04, n = 1`

What equation will calculate the value in x years?

`A(t) = P(1 + (r)/(n))^(nt)`

`A(x) = P(1 + (r)/(n))^(nx)`

`A(x) = 12000(1 + 0.04)^x`

`A(x) = 12000(1.04)^x`