Question

Trudy invested $3,200 into an account that will increase in value by 2.5% each year. Write an exponential function to model the situation, then find the

value of the investment after 10 years?

Answer 1

Example: Suppose you give $100 to a bank which pays you 10% compound interest at the end of every year. After one year you will have $100 + 10% = $110, and after two years you will have $110 + 10% = $121.

compound interest image

Problem:

If you deposit $4500 into an account paying 7% annual interest compounded semi anualy , how much money will be in the account after 9 years?

Result:

The amount is $8358.7 and the interest is $3858.7.

Explanation:

STEP 1: To find amount we use formula:

A = total amount

P = principal or amount of money deposited,

r = annual interest rate

n = number of times compounded per year

t = time in years

In this example we have

After plugging the given information we have

STEP 2: To find interest we use formula , since 8358.7 P = we have:

3858.7

Explanation: