Notes for Monday 8/29: 21.5
COMPOUND INTEREST VS. SIMPLE INTEREST
According to Thomas Malthus, human populations increase geometrically but food supplies increase arithmetically - so that the increase in food supplies will eventually be unable to math increases in population but there are/will be natural restrictions on the human population like war, famine, and disease....
More frequent compounding yields more interest. But as the frequency of compounding increases, the interest tends to a limiting amount, shown in the far right column.
- this is because the extra interest from compounding often is interest on interest.
Page 769 of the textbook does a good job of walking you through the steps to determining the limiting amount. ( look at the blue boxes).
As “n” is made larger and larger, the limiting amount is e^r, and the interest method is called continuous compounding. Continuous compounding in greater detail (with examples can be found on page 770 in the book)
More frequent compounding yields more interest. But as the frequency of compounding increases, the interest tends to a limiting amount, shown in the far right column.
- this is because the extra interest from compounding often is interest on interest.
Page 769 of the textbook does a good job of walking you through the steps to determining the limiting amount. ( look at the blue boxes).
As “n” is made larger and larger, the limiting amount is e^r, and the interest method is called continuous compounding. Continuous compounding in greater detail (with examples can be found on page 770 in the book)
Next scribe is Luna
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.