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In this lesson, we will learn how to solve questions on compound interest as a type of exponential growth.

Q1:

If you invest $ 5 0 0 0 in an account paying 4.5% interest compounded monthly, how much will the account be worth in 10 years?

Q2:

David invested $ π in a fund with a guaranteed annual growth of 1 2 % .

Write an expression for the value of his fund after π‘ years.

The fundβs growth is calculated monthly.

We can rewrite the expression for the fundβs value as π ο½ 1 . 1 2 ο 1 1 2 1 2 π‘ .

Use the new form of the expression to find the monthly growth rate. Give your answer to 3 significant figures.

Q3:

The return π dollars after π‘ years on a savings account is given by the explicit formula π = 1 2 3 4 οΌ 1 + 0 . 0 5 4 ο 4 π‘ . What are the meanings of the numbers 1 2 3 4 , 1.05, and 4?

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