Question 5: Putting all this information together, can you give a formula that would compute the amount of money earned if we invest a principle P using annual interest r over t years and we compound infinitely many times over the year? Give this formula. This is called continuously compounded interest. Compute the amount we get for investing $10,000 for 20 years at an annual rate of 0.5% and continuously compound. Discuss how you derived your formula. The above was one of many applications of limits. We will now change gears and look at limits more broadly.
Question 5: Putting all this information together, can you give a formula that would compute the amount of money earned if we invest a principle P using annual interest r over t years and we compound infinitely many times over the year? Give this formula. This is called continuously compounded interest. Compute the amount we get for investing $10,000 for 20 years at an annual rate of 0.5% and continuously compound. Discuss how you derived your formula. The above was one of many applications of limits. We will now change gears and look at limits more broadly.
Intermediate Algebra
10th Edition
ISBN:9781285195728
Author:Jerome E. Kaufmann, Karen L. Schwitters
Publisher:Jerome E. Kaufmann, Karen L. Schwitters
Chapter11: Exponential And Logarithmic Functions
Section11.2: Applications Of Exponential Functions
Problem 26PS
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Transcribed Image Text:Question 5: Putting all this information together, can you give a formula that would compute
the amount of money earned if we invest a principle P using annual interest r over t years and
we compound infinitely many times over the year? Give this formula. This is called continuously
compounded interest. Compute the amount we get for investing $10,000 for 20 years at an annual
rate of 0.5% and continuously compound. Discuss how you derived your formula.
The above was one of many applications of limits. We will now change gears and look at limits
more broadly.
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