Question

You invest $850 into a stock market fund, which grows at a rate of approximately 4% each year. Write an equation that can be used to calculate the amount of money in the fund after x years

Answer 1

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 $y=a\cdot (1+r)^x$, where,

y = Final amount,

a = Initial amount,

r = Growth rate in decimal form,

x = Time.

Let us convert 4% into decimal.

$4\%=\frac{4}{100}=0.04$.

We have $a=840$ and $r=0.04$, so our equation would be:

$y=850\cdot (1+0.04)^x$

$y=850\cdot (1.04)^x$

Therefore, the equation $y=850\cdot (1.04)^x$ can be used to calculate the amount of money in the fund after x years.