Continuously Clear Daily
February 7th, 2010 | Author: admin
Math people…continuous growth and the number e?
Ok, a bit confused (I wanna get things cleared up for a PRE-test tomorrow)
Ok…
Here’s some I’m confused on (practice)
1. At time t in years, the value, V, of an investment of $1000 is given by V=1000e^0.02t. When is the investment worth $3000?
Also,
What is the nominal and effective annual rates for an account paying the stated annual interest, compounded?
3%
a) annually
b) quarterly
c) daily
d) continuously
That one I’m very confused on:-(
Also,
3. A bank pays interest at the nominal rate of 4.2% per year. What is the effective annual yield if compounding is
a) annual
b) monthly
c) continuous
THANKS SO much
and please show all work so I understand (explanation is good too!)…no magic numbers!!!
Wikipedia is your friend:
http://en.wikipedia.org/wiki/Compound_interest
For the calculations for part 3, try:
http://www.moneychimp.com/calculator/compound_interest_calculator.htm
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