Question

Exponential Functions- For the following exercise, use the compound interest formula,

Answer 1

Answer:

$10,200

Step-by-step explanation:

The compound interest formula shown is:

$A(t)=P(1+\frac{r}{n})^{nt}$

Where

A(t) is the future amount

P is the initial deposit

n is the number of compounding in a year

annual = n is 1

semiannual = n is 2

quarterly = n is 4

etc.

t is the time in years

r is the rate of interest, annually

Now, the equation given is:

$10,200(1+\frac{0.03}{12})^{120}$

Matching this with general equation for compound growth, we can say:

rate of interest per year = 3%

n = 12 , that means monthly compounding

nt = 120

12t = 120

t = 10

So, number of years is 10

and

initial deposit, P is 10,200

The initial deposit made to the account was $10,200