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Application 5.7 PART 1

Epic Design Team

Created on April 8, 2024

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Transcript

APPLICATION: analyze investments for exponential change

You make an investment of $250 and know that it has an average annual growth rate of 7%. Let’s do an analysis to see how much money you’ll have over a period of time and how much that return has grown from your initial investment, assuming your growth rate remains unchanged.

We can use the equation below to represent this investment where x represents the number of years that have passed since you started and y represents your account balance after x years.

y=250(1.07)x

To calculate the return on an investment we use the formula: