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)