Question

You invest $850 into a stock market fund, which grows at a rate of approximately 4% each year. Write an equation that can be used to calculate the amount of money in the fund after x years

Answer 1

We have been given that you invest $850 into a stock market fund, which grows at a rate of approximately 4% each year. We are asked to write an equation that can be used to calculate the amount of money in the fund after x years.

We will use exponential growth formula to solve our given problem.

An exponential function is in form
`y=a\cdot (1+r)^x`, where,

y = Final amount,

a = Initial amount,

r = Growth rate in decimal form,

x = Time.

Let us convert 4% into decimal.

`4\%=(4)/(100)=0.04`.

We have
`a=840` and
`r=0.04`, so our equation would be:

`y=850\cdot (1+0.04)^x`

`y=850\cdot (1.04)^x`

Therefore, the equation
`y=850\cdot (1.04)^x` can be used to calculate the amount of money in the fund after x years.