Question

An account grows at an annual interest rate of r⁡​ ⁣, so it grows by a factor of x=1+r⁡​ ⁣⁣ ​⁡ each year. The function A(x)=800x 4 +350x 3 +500x 2 +600x⁣ ​⁡ gives the amount in the account after 4 years when the growth factor is x⁡​ ⁣⁣ ​⁡. What is the total amount in the account if the interest rate for the account is 3% each year? How much money was put into the account at the beginning?

Answer 1

Given:

Annual interest rate = r⁡​%

Growth factor : x = 1 + r⁡​

The below function gives the amount in the account after 4 years when the growth factor is x⁡​ ⁣⁣.

$A(x)=800x^4+350x^3+500x^2+600x$

To find:

The total amount in the account if the interest rate for the account is 3% each year and initial amount.

Solution:

Rate of interest = 3% = 0.03

Growth factor : x = 1 + ⁡0.03 = 1.03

We have,

$A(x)=800x^4+350x^3+500x^2+600x$

Substitute x=1.03 in the given function, to find the total amount in the account if the interest rate for the account is 3% each year.

$A(1.03)=800(1.03)^4+350(1.03)^3+500(1.03)^2+600(1.03)$

$A(1.03)=800(1.12550881)+350(1.092727)+500(1.0609 )+618$

$A(1.03)=900.407048+382.45445+530.45+618$

$A(1.03)=2431.311498$

$A(1.03)\approx 2431.31$

Therefore, the total amount in the account is 2431.31 if the interest rate for the account is 3% each year.

For initial amount the rate of interest is 0.

Growth factor : x = 1 + ⁡0 = 1

Substitute x=0 in the given function to find the initial amount.

$A(1)=800(1)^4+350(1)^3+500(1)^2+600(1)$

$A(1)=800+350+500+600$

$A(1)=2250$

Therefore, 2250 was put into the account at the beginning.