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2 August, 17:37

If $5000 is invested at an interest rate of 4% each year, what is the value of the investment in 5 years? Write an exponential function and solve.

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  1. 2 August, 17:44
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    If this value was compounded in 5 years, then we are going to use the compound interest formula to solve it.

    A = p (1+r%) ∧n

    Where A⇒ Amount accumulated for the entire period.

    p⇒ Money invested

    r⇒ Interest rate per year

    n ⇒ period the money was invested.

    ∴A = 5000 (1+4/100) ∧5

    The exponential function is A=5000*1.04∧5

    A=5000*1.04∧5

    =5000*1.216652902

    =6,083.264512

    The amount after 5 years = $6,083.26
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