Exponential Functions

Question

If we invest $4,000.00 in an investment account paying 1% interest compounded monthly, how much will the account be worth in 7 years?

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

 

the account in 7 years will be worth _______

Answer 1

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

 

    P = principal (original investment)

    r = annual interest rate in decimal form

    n = number of times that interest is compounded per year

    t = number of years

   A(t) = amount of money in the account in t years

 

So, A(7) = 4000(1 + 0.01/12)^(12)(7) = 4000(1.0008333)⁸⁴ = $4,289.91