Need help with algebra/trig functions?
You have invested 1000$ in a savings account that pays 4 percent interest per year. Sketch a graph showing the amount of money in the account as a function of the time elapsed since you made your investment.
How would you write that as a function, and how would the graph look?
Favorite Answer
After 2 years, it is $1000 * 1.04^2.
After 3 years, it is $1000 * 1.04^3.
…
After n years, it is $1000 * 1.04^n.
These points lie on the curve y = 1000*1.04^x ….(1)
If the interest is added annually, then between one interest date and the next, the interest is paid on a straight line basis.
Plot points annually of the graph described in (1). This is an exponential curve, of the same shape as y = e^x.
Join each point to the next one with a straight line. These straight lines will get steeper each year.
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