Calculate compound interest
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An investment of $500 is compounded monthly at a rate of 3%. What is the equation that models this situation? Graph the equation. |
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[list=1] [*]Read the problem statement and then reread the problem, determining the known quantities. [*]Substitute the known quantities into the general form of the compound interest formula, [math]A = P(1 + \frac{r}{n})^n[/math][math]^t[/math], for which [math]P[/math] is the initial value, [math]r[/math] is the interest rate, [math]n[/math] is the number of times the investment is compounded in a year, and [math]t[/math] is the number of years the investment is left in the account to grow. [*]Graph the equation. [/list] |