Model the equation in the given context
An investment of $500 is compounded monthly at a rate of 3%. What is the equation that models this situation? Graph the equation.
- Read the problem statement and then reread the problem, determining the known quantities.
- Substitute the known quantities into the general form of the compound interest formula, , for which is the initial value, is the interest rate, is the number of times the investment is compounded in a year, and is the number of years the investment is left in the account to grow.
- Graph the equation.