Is the compound interest formula—such as would

be used to calculate a car loan—an example of a function? If yes, of what type

of function is it an example of? Why might you identify it with that type of

function?

## Is the compound interest formula—such as would be used to calculate a car loan

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# 1 Answer

Compound interest on a loan would qualify as a function, and it falls into the category of exponential functions

an example of this type of function is f(x) = a^{x} for some constant a

If you think about the amount of money owed on a car loan (assuming you haven't made any payments yet)

The equation would be f(x) = C*(1+i)^{x}

where C is the initial cost, i is the interest rate per period ( which could be in months or years), and x is the number of time periods (also in months or years) that the loan has been accumulating interest.