MM212 College Algebra Unit 9 Discussion

One important application of exponential functions is calculating compound interest. Compound interest is a way of earning interest on a sum of money by figuring the interest at certain intervals. The interest may be figured once a year, twice a year, quarterly, monthly, or even daily! In the Unit 9 Discussion, you will be asked to find the value of an investment after a certain number of years.

There are three parts to the Unit 9 Discussion activity. Be sure to complete all three components to earn the most points! Click on the Discussion link located below the unit button to the left for full details and instructions.

Exponential and Logarithmic Functions

It is All About the Money

Part 1:

You have just come into a large sum of money! You make the wise decision to invest the money to use at a later date. Use the exponential equation to find the total amount in the investment account after a certain number of years.

For your problem:

• Choose an amount between $5,000 and $500,000 for p , the initial amount of money to invest.

• Choose a rate between 2% and 11% for r , the interest rate per year.

• Choose daily, monthly, or yearly for n , the number of times per year the interest will be compounded

• Choose between 5 and 30 years for t , the number of years you will let the account grow.

Tell your classmates what values you have chosen and find the value of the account at the end of the time period. How would you spend this money? Click here to see an example.

Part 2:

Find a classmate’s post that you considered informative. Perform the same calculation as your classmate but raise or lower the interest rate by at least 1%. Were you surprised at the difference in the amounts of money in the accounts at the end of the time period? Why or why not? Share your thoughts on the investment with your classmates.

Part 3:

Comment on at least one other classmate’s post by changing the problem to a continuously compounded scenario. Use the formula below and show all work involved in this new calculation.

Use the same P, r, and t from your classmate’s problem. Were you surprised by the difference in the total amount? Why or why not? Click here to see an example.

Note: Your responses to your classmates must be substantive and advance the Discussion. Substantive means your reply must 1) include comments specific to that particular post and 2) contain information or insight worthy of sharing with the instructor and class. Contact your instructor if you have questions about making substantive responses. MM212 College Algebra Unit 9 Discussion