mac1147_lecture21_1_c

mac1147_lecture21_1_c - L21 Applications of Exponential...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
241 L21 Applications of Exponential Function and Logarithms; Logistic Models Simple Interest Formula: If a principal of P dollars is invested for a period of t years at a per annum interest rate R , expressed as a decimal, the interest I earned is IP R t = ⋅⋅ The interest I is called the simple interest . Compound interest is the interest paid on the principal and previously earned interest. Compound Interest Formula : The amount A after t years due to a principal P invested at an annual interest rate r compounded n times per year is 1 nt r AP n ⎛⎞ =⋅ + ⎜⎟ ⎝⎠ Note : The more frequently the interest rate is compounded (the larger n ), the larger is the amount of A. Question : Is it true that A →∞ , as n ?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
242 Example : Suppose that a principal P = $1.00 is invested at an annual interest rate 1 r = (100%) compounded n times per year. (a) Find the future value A after 1 t = year. (b) What value does A approach when n →∞ ? In general, lim 1 nt rt n r P Pe n →∞ ⎛⎞ += ⎜⎟ ⎝⎠ Continuous Compounding: The amount A after t years due to a principal P invested at an annual interest rate r compounded continuously is rt A Pe =
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/07/2011 for the course MAC 1147 taught by Professor German during the Summer '08 term at University of Florida.

Page1 / 12

mac1147_lecture21_1_c - L21 Applications of Exponential...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online