E obtain a formula or a recurrence relation some

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: with interest compounded annually. How much will be in the account after 30 years? Solution: let Pn denote the amount in the account after 30 years. Pn satisfies the following recurrence relation: Pn = Pn- 1 + 0.11 Pn- 1 = (1.11) Pn- 1 with the initial condition P0 = 10,000 Financial Applica$on Pn = (1.11) Pn- 1 by forward substitution, we get: P1 = (1.11)P0 P2 = (1.11)P1 = (1.11) ∙ (1.11) P0 = (1.11)2 P0 P3 = (1.11)P2 = (1.11) ∙ (1.11)2 P0 = (1.11)3 P0 : Pn = (1.11)Pn- 1 = (1.11)n P0 Pn = (1.11)n 10...
View Full Document

This document was uploaded on 02/27/2014 for the course CS 215 at SIU Carbondale.

Ask a homework question - tutors are online