Practice problem

Linear vs. Exponential Functions

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Contributors

Taylor Evans
Liza Sulkin

The New York Stock Exchange trading floor $\\$ Image by Kevin Hutchinson via Wikimedia Commons (Creative Commons 2.0 etc for Commercial Reuse)

The equation for compounded interest is $A = P(1+ \dfrac{r}{n})^{nt}$ where " $A$ " is the ending amount, " $P$ " is the beginning amount (or "principal"), " $r$ " is the interest rate (expressed as a decimal), " $n$ " is the number of compoundings a year, and " $t$ " is the total number of years

Helen is looking for the best way to save money for the future. She is trying to choose between continually adding $\$100$ every month or putting $\$10,000$ in an account that would be compounded monthly with $3.5\%$ interest. Which method would leave Helen with more money after $10$ years?