Question

A principal of $4700 was invested at 4.75% interest, compounded annually.

Lett be the number of years since the start of the investment. Let y be the value of the investment, in dollars.
Write an exponential function showing the relationship between y and t.

Answer 1

Explanation:

We would apply the formula for determining compound interest which is expressed as

y = P(1 + r/n)^nt

Where

y = the value of the investment at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount invested

From the information given,

P = $4700

r = 4.75% = 4.75/100 = 0.0475

n = 1 because it was compounded once in a year.

Therefore, the exponential function showing the relationship between y and t is

y = 4700(1 + 0.0475/1)^1 × t

y = 4700(1.0475)^t