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Interest compounding differences

MAMDMD3b Determine, represent, and analyze mathematical models for income, expenditures, and various types of loans and investments Is there any great benefit to having interest compounded quarterly, monthly, weekly, or continuously?. Interest compounding differences.

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Interest compounding differences

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  1. MAMDMD3b Determine, represent, and analyze mathematical models for income, expenditures, and various types of loans and investmentsIs there any great benefit to having interest compounded quarterly, monthly, weekly, or continuously?

  2. Interest compounding differences

  3. Suppose $5000 is put into an account that pays 4% compounded yearly. How much will be in the account after 3 years?

  4. Suppose $5000 is put into an account that pays 4% compounded quarterly. How much will be in the account after 3 years?

  5. Suppose $5000 is put into an account that pays 4% compounded monthly. How much will be in the account after 3 years?

  6. Continuously Compounded Interest A = Pert A is the final amount P is the original amount e is natural log 2.71828 r is the rate and t is number of years

  7. Suppose $5000 is put into an account that pays 4% compounded continuously. How much will be in the account after 3 years?

  8. Does it make a big difference?

  9. Interest compounding differences • http://www.moneychimp.com/articles/finworks/continuous_compounding.htm

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