Question

The original value of an investment is $1400, and the value increases by 9% each year. Use an exponential growth function to find the value of the investment after 25 years.

Answer 1

$13,282.83

Explanation:

The initial value of the investment is $1400, when t = 0.

The appropriate formula for this exponential growth is

A = Pe^(rt), where r is the exponential rate of change and t is the number of years.

Thus:

A = $1400e^(0.09t). Note that when t = 0, A = $1400 as expected.

After 25 years:

A = $1400e^(0.09*25) = $13,282.83