Example 3

An investment of $500 is compounded monthly at an annual rate of 3%. What is the equation that models the value of the investment? Graph the equation both on a calculator and on graph paper.
  1. Read the problem statement and then reread the problem, determining the known quantities.
  2. Substitute the known quantities into the general form of the compound interest formula, .
  3. Graph the equation using a graphing calculator.
  4. Transfer your graph from the screen to graph paper.
This applet is provided by Walch Education as supplemental material for their mathematics programs. Visit www.walch.com for more information on their resources.