Money invested in a bank can generate two different types of interest. Compound interest occurs when interest is added to the balance at the end of a time period and interest is then calculated on the total of these at the end of the next time period.
If £10,000 is invested into an account offering 2% compound interest each year then the balance grows as shown in the table.
This is an example of an exponential graph in the form .
Graphs in the form of increase in value.
The graph shows how bacteria grows over time . The equation of the graph is:
From the graph, when .
Substituting these values into :
Dividing by 20 gives:
Square rooting gives: