You invest $1000 at 7 % interest compounded annually. What is the exponential equation that models this situation? According to your equation, how much will the investment be worth 3 years later?
You invest $1000 at 7 % interest compounded annually. What is the exponential equation that models this situation? According to your equation, how much will the investment be worth 3 years later?
You invest $1000 at
7
%
interest compounded annually. What is the exponential equation that models this situation? According to your equation, how much will the investment be worth 3 years later?
Expert Solution & Answer
To determine
To determine the value of investment after 3 years.
Answer to Problem 7STP
The value after 3 years shall be approximately $1225.
Explanation of Solution
Given information:
Total amount invested is $1000 at 7% interest compounded annually.
We know that the amount P invested for time t at rate of r is given by,
A=P(1+r)t
Hence put the values given in the question we get,
P=1000(1+0.07)3
(7% = 0.07)
Hence this is our exponential equation that models the situation.
Now we solve, we get,
P=1000(1+0.07)3P=1000×1.225043P=1225.04
Hence the value after 3 years shall be approximately $1225.
College Algebra in Context with Applications for the Managerial, Life, and Social Sciences (5th Edition)
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