Michelle invests $1000 at a bank offering 3% compounded quarterly. Write an equation to model the growth of the investment.

Responses
a
b
c
d

1 answer

To write an equation that models the growth of Michelle's investment, we can use the formula for compound interest, which is:

\[ A = P \left(1 + \frac{r}{n}\right)^{nt} \]

Where:

  • \( A \) is the amount of money accumulated after n years, including interest.
  • \( P \) is the principal amount (the initial amount of money).
  • \( r \) is the annual interest rate (decimal).
  • \( n \) is the number of times that interest is compounded per year.
  • \( t \) is the number of years the money is invested for.

For Michelle's investment:

  • \( P = 1000 \)
  • \( r = 0.03 \) (3% as a decimal)
  • \( n = 4 \) (since the interest is compounded quarterly)

Substituting these values into the formula, we get:

\[ A = 1000 \left(1 + \frac{0.03}{4}\right)^{4t} \]

Now, simplifying the expression inside the parenthesis:

\[ \frac{0.03}{4} = 0.0075 \]

So the equation becomes:

\[ A = 1000 \left(1 + 0.0075\right)^{4t} \]

Which simplifies to:

\[ A = 1000 \left(1.0075\right)^{4t} \]

This is the equation that models the growth of Michelle's investment over time. If you have specific choices (responses a, b, c, d) to choose from, please provide them, and I can help identify the correct one.