Question

The original value of an investment is $4500 In the value increases by 12% each yearWriting use an exponential growth function To find valueOf the investment after 20 years Round to the nearest cent

Answer 1

The value of the investment after 20 years is $43,408.30

Explanation:

In this question, we are asked to use an exponential function to calculate the future value of an investment that has a yield rate of 12% per year.

Mathematically, the exponential function can be modeled as follows;

FV = I( 1 + r)^t

where Fv is the future value we are trying to calculate

I is the initial amount invested which is $4,500

r is the increment per year which is 12% and this is same as 12/100 = 0.12

this the number of years we expect the investment to run which is 20.

Plugging these values, we have;

Fv = 4500( 1 + 0.12)^20

Fv = 4500(1.12)^20

Fv = $43,408.32

This is same as $43,408.30 to the nearest cent