Roberta invested $600 into a mutual fund that paid 4% interest each year compounded annually.

Question

Write an exponential function of the form y=a(b)x to describe the value of the mutual fund then use that function to determine the value of the mutual fund in 15 years

Answer 1

In your given formula,

a = the amount invested

b = 1 + the annual interest rate, as a decimal

x = the number of years that the money is invested, without any withdrawals or additional contributions

So the function is y = 600(1+.04)^x , or y = 600(1.04)^x.

Now just use x=15: y = 600(1.04)¹⁵. REMEMBER the Order of Operations!!... y ≈ $1,080.57.

I hope this helps!!

Answer 2

"a" is the amount invested so a = 600

"b" is the amount the fund grows by so b = 1.04 (if b = 1.00 then it would not grow at all because anything multiplied by 1 stays the same. To get growth you must add 1 to the interest, in decimal form. 4% = 0.04 and 1 + 0.04 = 1.04)

So the equation is y = 600(1.04)^x where "x" is the time in years and "y" is the value of the mutual fund after "x" years.