Algebra 1 help please

Grace deposits $1000 in a mutual fund earning 9.25% annual interest, compounded monthly.

1. Write an exponential function that models this situation where y is the amount of Grace's investment and x is time in years.

2. Use your equation to complete the years and balance chart. (Round to the nearest cent.)

3.Use your data from problem 2 to graph your equation from problem 1. (Use an x-scale of 5 years and a y-scale of $1000.)

4. If Grace were to invest $1000 at age 25 and not withdraw any money until retirement at age 67, calculate the expected value of her investment. Show your calculations and consider the trend of your graph.

All help is appreciated! I suck at math and need help with it. I just don't understand it.

Answer 1

[Star Strider]

Well, by convention, monthly interest is annual interest divided by the number of months in the year (but then you already know that). Then, Grace gets that amount of interest the first month, added to her original $1000. She doesn’t deposit anything more (not a good move in reality), and just relies on the magic of compound interest, so at the end of the second month, she gets monthly interest on the new amount (after adding the first month’s interest), and so on until she turns 67.

It’s not so intimidating when you think about it a bit.

And you don’t ‘suck at math’. No one (that I know of at least) was ever born knowing it. Give some time to it, and you’ll understand it.

[Ayriel Holt]

How do I do the graph and how do I work our problem 4??

[Star Strider]

The problem wants you to ‘use an x scale of 5 years and a y scale of $1000’, so I would calculate the compound interest in 5 year increments, and then plot it. At the origin, t=0 and V=1000, where ‘t’ is time and ‘V’ is accumulated value, where you would plot a dot at the first whole increment on the y-axis. In 5 years (by my calculations), she would have $1585.20, and at the first x-increment (representing the end of the first 5 years), you would plot a dot at about 1.6 y-increments, and so forth for the next 42 years.

That seems to me to cover both the chart and the graph.

Please post your results here as well. You’ll quite likely get it correct, so I’d like to see what you did.