Question

Autumn wants to invest $1000. The table below shows the value of her investment under two different options for three different years:

Number of years 1 2 3
Option 1 (amount in dollars) 1100 1200 1300
Option 2 (amount in dollars) 1100 1210 1331
Part A: What type of function, linear or exponential, can be used to describe the value of the investment after a fixed number of years using option 1 and option 2? Explain your reasoning. (4 points)

Part B: Autumn wants to invest in an option that would help to increase her investment value by the greatest amount in 7 years. Will there be any significant difference in the value of Autumn's investment after 7 years if she uses option 2 over option 1? Explain your answer, and show the investment value after 7 years for each option if the equation for option 1 is f(x)=100x + 1000 and the equation for option 2 is g(d) = 1000(1.1)d

Answer 1

• See below

Explanation:

Part A

According the table, the yearly amount increases by 100 dollars in option 1 and 1.1 times in option 2.

It means the function is linear in option 1 and exponential in option 2.

Part B

Calculate the amount of total value in each case substituting x or d by 7 and compare the amounts:

• f(7) = 100*7 + 1000 = $1700
• g(7) = 1000*(1.1)^7 = $1948.72 (rounded)

As we see the option 2 is better choice and the difference is:

• $1948.72 - $1700 = $248.72