# Model the equation in the given context

An investment of \$500 is compounded monthly at a rate of 3%. What is the equation that models this situation? Graph the equation.

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1. Read the problem statement and then reread the problem, determining the known quantities.
2. Substitute the known quantities into the general form of the compound interest formula, $A = P(1 + \frac{r}{n})^n$$^t$, for which $P$ is the initial value, $r$ is the interest rate, $n$ is the number of times the investment is compounded in a year, and $t$ is the number of years the investment is left in the account to grow.
3. Graph the equation.

Created with GeoGebraShared by Walch Education, Mathguru
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