This preview has intentionally blurred sections. Sign up to view the full version.
View Full DocumentThis preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: Â§ 5.2 Compound Interest Math 121 Lecture 27 ! Compound Interest: NonContinuous ! Compound Interest: Continuous ! Applications of Interest Compounded Continuously Compound Interest: NonContinuous â€¢ P = principal amount invested â€¢ m = the number of times per year interest is compounded â€¢ r = the interest rate â€¢ t = the number of years interest is being compounded â€¢ A = the compound amount, the balance after t years ! For example, suppose you invest $32,000 into a certificate of deposit that has an annual interest rate of 5.2% compounded quaterly for 3 years. Then compound amount is Notice that as m increases, so does A . Therefore, the maximum amount of interest can be acquired when m is being compounded all the time  continuously. Compound Interest: Continuous â€¢ P = principal amount invested â€¢ r = the interest rate â€¢ t = the number of years interest is being compounded â€¢ A = the compound amount, the balance after t years Consider the $32,000 from the earlier example. Now we will invest the money in an account that has 5.2% annual will invest the money in an account that has 5....
View
Full Document
 Spring '09
 Math, Calculus, Annual Percentage Rate, Natural logarithm, Logarithm

Click to edit the document details