Compound interest Suppose you make a deposit of $P into a
Chapter 4, Problem 109(choose chapter or problem)
Compound interest Suppose you make a deposit of $P into a savings account that earns interest at a rate of 100 r% per year. a. Show that if interest is compounded once per year, then the balance after t years is B1t2 = P11 + r2t. b. If interest is compounded m times per year, then the balance after t years is B1t2 = P11 + r>m2mt. For example, m = 12 corresponds to monthly compounding, and the interest rate for each month is r>12. In the limit m S _, the compounding is said to be continuous. Show that with continuous compounding, the balance after t years is B1t2 = Pert.
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