Simple Interest Versus Compounding Continuously Grace
Chapter 3, Problem 268(choose chapter or problem)
Simple Interest Versus Compounding Continuously Grace purchases a $1000 certificate of deposit that will earn 5% each year. The interest will be mailed to her, so she will not earn interest on her interest.
(a) Show that after t years, the total amount of interest she receives from her investment plus the original $1000 is given by
\(f(t)=1000(1+0.05 t)\)
(b) Grace invests another $1000 at 5% compounded continuously. Make a table that compares the values of the two investments for t = 1, 2,..., 10 years.
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