SOLUTION: Hi Ralph opened a savings account and deposit of100 every month after that he deposited 20 why isn't the relationship proportional?

Question 1099154: Hi
Ralph opened a savings account and deposit of100 every month after that he deposited 20 why isn't the relationship proportional?
Answer by Boreal(15235) (Show Source): You can put this solution on YOUR website!
the amount of money he has is earning interest in different amounts and different proportions each month.
Suppose he is earning 5% every year compounded monthly.
After 1 month he has 100(1+(.05/12))=100.42
he deposits 20
now he has 120.42, and a month later, that is worth 120.92, fifty cents more, not 42 cents.
The formula is exponential, but in addition, he is adding a different proportion to the principal each month.
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