Question

$100 is invested at 12% per year. If the amount is compounded annually, write the total amount after 2 years in exponential function form.

Answer 1

A = $100(1.12)^2

Explanation:

The standard formula for compound interest is given as;

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

Where;

A = final amount/value

P = initial amount/value (principal)

r = rate yearly

n = number of times compounded yearly.

t = time of investment in years

For this case;

P = $100

t = 2years

n = 1

r = 12% = 0.12

Substituting the values, we have;

A = $100(1+0.12)^(2)

A = $100(1.12)^2