Question

Belinda wants to invest $1000. The table below shows the value of her investment under two different options for two different years.

Number of years 1 2 3
Option 1 (amount in dollars) 1300 1600 1900
Option 2 (amount in dollars) 1120 1254.40 1404.93


Part A: What type of function, linear or exponential, can be used to describe the value of the investment after a fixed number of years using option 1 and option 2? Explain your answer. (2 points)

Part B: Write one function for each option to describe the value of the investment f(n), in dollars, after n years. (4 points)

Part C: Be

Answer 1

So far, I wrote:
Part A:
Option one can be a linear as it makes a straight line when graphed. Option two, however, is exponential, because it does not make a straight line.

I don't quite understand how to do this problem, could someone help explain it to me?

Answer 2

I never liked long and annoying word problems like this.

Answer 3

It's a compound interest problem and I like those.

Answer 4

I really just need help on part b, I've been stuck on it for a while.

Answer 5

Part A - Option 1 is linear and it is simple interest

Answer 6

Okay on to part B

Answer 7

Option 1
Total = 1,000 + (1 + n*.3)
n = number of years
the interest rate is a whopping 30% per year (but it is simple interest).

Here's some calculations from year zero to year 21

0 1,000.00
1 1,300.00
2 1,600.00
3 1,900.00
4 2,200.00
5 2,500.00
6 2,800.00
7 3,100.00
8 3,400.00
9 3,700.00
10 4,000.00
11 4,300.00
12 4,600.00
13 4,900.00
14 5,200.00
15 5,500.00
16 5,800.00
17 6,100.00
18 6,400.00
19 6,700.00
20 7,000.00
21 7,300.00

Answer 8

Option 2

Total = $1,000 * (1 + rate)^n
The rate here is 12% but it is compound interest and again 'n' is years

Here are some calculations from year zero to year 21.
0 1,000.00
1 1,120.00
2 1,254.40
3 1,404.93
4 1,573.52
5 1,762.34
6 1,973.82
7 2,210.68
8 2,475.96
9 2,773.08
10 3,105.85
11 3,478.55
12 3,895.98
13 4,363.49
14 4,887.11
15 5,473.57
16 6,130.39
17 6,866.04
18 7,689.97
19 8,612.76
20 9,646.29
21 10,803.85

Note that at year 16, option 2 produces more money than option 1.
Although option 2 has a much smaller interest rate (12%) (compared to 30%), it is compound interest.

Answer 9

Crunchberries ni _ _ er damn! But damn!!!!!!!!!!!!!!!

Answer 10

and dat's da name of dat tune !!!

Answer 11

What is the rate number? 0.12 didn't work

Answer 12

option 1 rate is 30% but use .3
option 2 is 12% but use .12

Answer 13

Oh! I get it now!! Thank you so so much! You really helped me out a lot!

Answer 14

Let's try 5 years at option 2
total = $1,000 * (1.12)^5
total = $1,000 * 1.76234168
total = $1,762.34

Answer 15

okay momoluvgd
glad I helped you out
(I had a feeling I'd be good at this compound interest stuff)