The current amount A of a principal P invested in a savings account paying an annual interest rate r is given by nt A = P(1 + 1) ™ page 292 where n is the number of times per year the interest is compounded. For continuous compounding, A = Pet. Suppose $10,000 is initially invested at 2.5 percent (r = 0.025). a. Plot A versus t for 0 ≤t≤20 years for four cases: continuous compounding, annual compounding (n = 1), quarterly compounding (n = 4), and monthly compounding = 12). Show all four cases on the same subplot and label each curve. On a
*Using Matlab*
The current amount A of a principal P invested in a savings account paying an annual interest rate r is given by
A = P(1+r/n)^(nt)
where n is the number of times per year the interest is compounded. For continuous compounding, A = Pe^(rt). Suppose $10,000 is initially invested at 2.5 percent (r = 0.025).
a. Plot A versus t for 0 ≤ t ≤ 20 years for four cases: continuous compounding, annual compounding (n = 1), quarterly compounding (n = 4), and monthly compounding (n = 12). Show all four cases on the same subplot and label each curve. On a second subplot, plot the difference between the amount obtained from continuous compounding and the other three cases.
b. Redo part a, but plot A versus t on log-log and semilog plots. Which plot gives a straight line?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
