Exercise 9 Page 86

a Let's examine the given expression.

4000(1+ 0.05)^2 In the expression, 4000 is the amount of money we invested, 0.05 is the interest rate as a decimal, and 2 is the number of years.

b Let's find the amount of money at the end of two years.

4000(1+0.05)^2

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Evaluate

Add terms

4000(1.05)^2

Calculate power

4000(1.1025)

4410

We will have $4410 at the end of two years.

c The expression will be as follows if we invest $ 10 000 in a certificate of deposit (CD) for 4 years at an annual rate of 6.25 %= 0.0625.

10 000(1+ 0.0625)^4 Let's evaluate it.

10 000(1+0.0625)^4

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Evaluate

Add terms

10 000(1.0625)^4

Calculate power

10 000(1.27442...)

12 744.29321 ...

Round to 2 decimal place(s)

12 744.30

We will have about $12 744.30 at the end of four years.

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