. Is the compound interest formula—such as would be used to calculate a car loan—an example of a function? If yes, of what type of function is it an example? Why might you identify it with that type of function?

Question

.   Is the compound interest formula—such as would be used to calculate a car loan—an example of a function? If yes, of what type of function is it an example? Why might you identify it with that type of function?

jim_thompson5910 · Answer

If you hold the principle, interest rate, and compounding frequency fixed (ie don't change the values) and you let time vary, then the compound interest formula is a function of time.


This would be an example of an exponential function since the formula is


A= P(1+r/n)^(nt)