What ODE does the last function satisfy? Let the initial investment be $1000 andr=6%. Compute the value of the investment after 1 year and after 5 years using each of the three formulas. Is there much difference?
What ODE does the last function satisfy? Let the initial investment be $1000 andr=6%. Compute the value of the investment after 1 year and after 5 years using each of the three formulas. Is there much difference?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
![Interest rates. Get the value of the
investment after 5 years only!!!
(Interest rates) Show by algebra that the investment y(1)
from a deposit yo after 1 years at an interest rate r is
Ya(1) = yo[1 + r]° (Interest compounded annually)
Ya1) = yo[1 + (r/365)J3631
(Interest compounded daily).
Recall from calculus that
(1 + (1/n)]" → e as n → *;
hence [1 + (r/n)]"t → e"; thus
y1) = yoe" (Interest compounded continuously).
What ODE does the last function satisfy? Let the
initial investment be $1000 and r = 6%. Compute the
value of the investment after 1 year and after 5 years
using each of the three formulas. Is there much
difference?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F40364a42-07ba-4c5d-923f-17db49a519b4%2Fdeba1445-2f19-4cdc-a020-e3e94db4f113%2F8j0pe2g_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Interest rates. Get the value of the
investment after 5 years only!!!
(Interest rates) Show by algebra that the investment y(1)
from a deposit yo after 1 years at an interest rate r is
Ya(1) = yo[1 + r]° (Interest compounded annually)
Ya1) = yo[1 + (r/365)J3631
(Interest compounded daily).
Recall from calculus that
(1 + (1/n)]" → e as n → *;
hence [1 + (r/n)]"t → e"; thus
y1) = yoe" (Interest compounded continuously).
What ODE does the last function satisfy? Let the
initial investment be $1000 and r = 6%. Compute the
value of the investment after 1 year and after 5 years
using each of the three formulas. Is there much
difference?
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