a. Answer The linear graph represents the graph for simple interest and exponential graph represents for compound interest. Explanation Calculation: We have two options for investing $ 500 . The first earns 7 % interest compounded annually, and the second earns 7 % simple interest. The graph shows the growth of each investment over a 30 −year period. As we know the future amount increases exponentially for the compound interest and linearly for the simple interest. Hence, the linear graph represents the graph for simple interest and exponential graph represents for compound interest. b. To determine Find the equations that model the investment growth and by graphing the models. Answer Explanation Calculation: We know the formula for future amount with compound interest, A = e r t P = $ 500 , r = 7 % A = 500 e 0.07 t A = e r t We know the formula for future amount with simple interest, A = P ( 1 + r t ) A = 500 ( 1 + 0.07 t ) Now, plotting the graph, Hence, the graph is shown above. c. To determine Choose the option. Answer Compound interest . Explanation Calculation: We would choose the compound interest because the interest for that one increases rapidly than the simple interest. Hence, we would have chosen compound interest.

4th Edition

ISBN: 9781337516853

Author: Larson

Publisher: CENGAGE CO

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Question

Chapter 3, Problem 12PS

To determine

Describe the graph represents each type of investment .

Expert Solution

Answer to Problem 12PS

The linear graph represents the graph for simple interest and exponential graph represents for compound interest.

Explanation of Solution

Calculation:

We have two options for investing $500 . The first earns 7% interest compounded annually, and the second earns 7% simple interest. The graph shows the growth of each investment over a 30 −year period.

EBK PRECALCULUS W/LIMITS, Chapter 3, Problem 12PS , additional homework tip 1

As we know the future amount increases exponentially for the compound interest and linearly for the simple interest.

Hence, the linear graph represents the graph for simple interest and exponential graph represents for compound interest.

To determine

Find the equations that model the investment growth and by graphing the models.

Expert Solution

Answer to Problem 12PS

EBK PRECALCULUS W/LIMITS, Chapter 3, Problem 12PS , additional homework tip 2

Explanation of Solution

Calculation:

We know the formula for future amount with compound interest,

A=ertP=$500,r=7%A=500e0.07t

A=ert

We know the formula for future amount with simple interest,

A=P(1+rt)A=500(1+0.07t)

Now, plotting the graph,

EBK PRECALCULUS W/LIMITS, Chapter 3, Problem 12PS , additional homework tip 3

Hence, the graph is shown above.

To determine

Choose the option.

Expert Solution

Answer to Problem 12PS

Compound interest.

Explanation of Solution

Calculation:

We would choose the compound interest because the interest for that one increases rapidly than the simple interest.

Hence, we would have chosen compound interest.

Chapter 3, Problem 11PS

Chapter 3, Problem 13PS

Chapter 3 Solutions

EBK PRECALCULUS W/LIMITS

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