Algebra 1B

MAT 117 /MAT117 Week 8 Discussion Question

Version 8

Week 8 Discussion Question

Is the compound interest formula—such as would be used to calculate a car loan—an example of a function? If yes, of what type of function is it an example? Why might you identify it with that type of function?

Response

Yes the compound interest formula—such as would be used to calculate a car loan is an example of a function.The Compound Interest Formula is A = p(1 + r/n)^(nt). This is a function, because for each value in the domain (your input values) there will only be one value in the range (your output values). Assuming that your unknown variable is t, this would be exponential, because p, r, and n are all fixed values (or constants). This would fit the exponential parent function f(x) = a*b^x.

Response 2

Yes, the compound interest formula in the case of a car loan is an example of a exponential function. I believe there are several examples to identify with the function, but one would be investing into a compound interest savings account. Granted I realize interest rates are very low, but you could use the compound interest formula to figure out what your initial investment would yield after a certain period of time.

Response 3

In the compound interest formula such as would be used to calculate a car loan an example of a function? If yes of what type of function is it an example. Why might you identify it with that type of function ? Yes, I think the exponential function is a type of compound formula. The compound interest equation is p=c (1+r|n|^nt , p= future value, c=initial deposit, r=interest rate,n #of times per year interest is compounded t= number of years invested. Exponential function A=p(1+r|n|^nt a=ending amount p=beginning amount principal n=number of compoundings a year and t=total number of years.

Response 4

The compound interest formula to calculate a car loan is an example of an exponential function. You may identify it with this type of function when money is invested into an account a portion is added to the balance. The money that is added to the balance is the interest. When additional money is added to the balance it earns more interest during the next compounding period.

Here is an example of a formula used to compound interest:

A= Final amount

P = Principal r= interest rate n=number of compounds per year t = time (in years)

A=(P+r/t)^nt

The compound interest formula is an example of a function and would be considered as such because for each value in the domain, or your input values, there will be one value in the range or the output values. The type of function that most identifies with the compound interest formula is the exponential one. The equation would read something like this:

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

A= the ending amount

P = the Principle or beginning amount r = the interest rate n= the number of compoundings per year t = the number of years, or time

PurpleMath.com has an excellent explanation of this formula, and I have shared the link below.

http://www.purplemath.com/modules/expofcns4.htm

Yes the compound Interest Formula can in fact be used to calculate a car loan and it is an example of an exponential function.

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

In which

A= the final amount

P= Principle (Starting Balance)

R=