Question

If $5000 is invested at an interest rate of 4% each year, what is the value of the investment in 5 years? Write an exponential function and solve.

Answer 1

If this value was compounded in 5 years, then we are going to use the compound interest formula to solve it.
A = p(1+r%)∧n
Where A⇒ Amount accumulated for the entire period. 
            p⇒ Money invested
            r⇒ Interest rate per year
            n ⇒ period the money was invested. 

∴A = 5000(1+4/100)∧5
  The exponential function is A=5000×1.04∧5

A=5000×1.04∧5
   =5000×1.216652902
   =6,083.264512
The amount after 5 years = $6,083.26