Question

An investment is initially worth $10,000. Write a formula for the value of this investment for each situation described below.

Answer 1

Using the compound interest formula:

The value increases by 7% every year:

$V(t)=10000(1+0.07)^t$

The value increases by 7% every 3 years:

$V(t)=10000(1+0.07)^{\frac{t}{3}}$

The value increases by 7% every six months:

$V(t)=10000(1+\frac{0.07}{2})^{2t}$