We have been given that you invest $850 into a stock market fund, which grows at a rate of approximately 4% each year. We are asked to write an equation that can be used to calculate the amount of money in the fund after x years.
We will use exponential growth formula to solve our given problem.
An exponential function is in form
, where,
y = Final amount,
a = Initial amount,
r = Growth rate in decimal form,
x = Time.
Let us convert 4% into decimal.
.
We have
and
, so our equation would be:


Therefore, the equation
can be used to calculate the amount of money in the fund after x years.