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Graphing Interest Rate

Using the formula

A=P(1 + r/n)^(nt),

let r=8%, P=1, and n=1, and give the coordinates (t,A) for the points where t=0, 1, 2, 3, 4.

Round your answer to the 100th place.

How do you graph this? I am confused.

Solution Preview

For a fixed rate, a fixed principal amount, and a fixed compounding cycle, the return is an exponential function of time.

The general formula for compound interest is A = P(1 + r/n)nt. Given the specifics of this problem (a rate of 8% (r = 0.08), a starting value of $1 (P = 1), and compounding only once per year (n = 1)), the formula that we will use is:

A = (1)(1 + ...