3.7 Case Study: Population Modeling: Quiz


Problem 4

Continuing with the previous problem, give a formula for computing the balance after t years if the interest is compounded continually. Which method of compounding results in a higher account balance?


Answers, problem 4

Balance after t years = 100 e0.04 t

Continuous compounding results in a higher balance (104.0810774192 after one year, vs. $104.0808493132 with daily compounding)


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