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Intermediate Algebra – Student Workbook – Second Edition 2013

Intermediate Algebra – Student Workbook – Second Edition 2013

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Lesson 3a <strong>–</strong> Introduction to Exponential Functions<br />

Practice Problems<br />

9. Assume you can invest $1000 at 5% Simple Interest or 4% Compound Interest (Annual).<br />

The equation for Simple Interest is modeled by: A = P + Prt. Compound Interest is modeled<br />

by A = P(1+r) t . Given that, your two equations are:<br />

S(t) = 1000 + 50t<br />

C(t) = 1000(1.04) t<br />

a) How much does each investment return after 1 year?<br />

b) How much does each investment return after 10 years?<br />

c) How much does each investment return after 20 years?<br />

d) When would the two investments return the same amount? How much would they<br />

return? (Use your calculator and take advantage of the Calc Intersect function)<br />

e) Which investment would you go with? Why?<br />

Scottsdale Community College Page 117 <strong>Intermediate</strong> <strong>Algebra</strong>

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