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lecture27 - Â 5.2 Compound Interest Math 121 Lecture 27...

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Unformatted text preview: Â§ 5.2 Compound Interest Math 121 Lecture 27 ! Compound Interest: Non-Continuous ! Compound Interest: Continuous ! Applications of Interest Compounded Continuously Compound Interest: Non-Continuous 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....
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lecture27 - Â 5.2 Compound Interest Math 121 Lecture 27...

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