SOLUTION: I'm not doing very well helping my son understand this problem. Michael buys into a mutual fund to save for retirement, but does not add any money after his initial investment.

Question 632680: I'm not doing very well helping my son understand this problem.
Michael buys into a mutual fund to save for retirement, but does not add any money after his initial investment. His account balance is $2,700 after three years, $3,290 after five years; $4,030 after seven years; $5,440 after 10 years; and $8,950 after fifteen years. Perform an exponential regression on this data to complete the following items.
1. What was the amount of Michael's initial investment (to the nearest dollar)?
2. What (to the nearest tenth of a percent) is his annual rate of return.
3. What is the projected account balance at Michael's retirement, 35 years after his initial investment (to the nearest dollar)?
Thank you!
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
Michael buys into a mutual fund to save for retirement, but does not add any money after his initial investment. His account balance is $2,700 after three years, $3,290 after five years; $4,030 after seven years; $5,440 after 10 years; and $8,950 after fifteen years. Perform an exponential regression on this data to complete the following items.
----
Paired-data: (3,2700) ; (5,3290) ; (7,4030) ; (10,5440); (15,8950)
Running an exponential regression on a TI-84 I get:
y = 2000*1.105^x
---------------------------
1. What was the amount of Michael's initial investment (to the nearest dollar)?
Ans: $2000
------------------------
2. What (to the nearest tenth of a percent) is his annual rate of return.
Ans: 10.5%
------------------
3. What is the projected account balance at Michael's retirement, 35 years after his initial investment (to the nearest dollar)?
f(35) = $65,873
==================
Cheers,
Stan H.

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