Page 18 - Calculus for the Clueless, Calc II

If you use a bank with simple interest, go to another bank.

Note 2

For all intents and purposes, daily compounding is continuous compounding unless you have 10 billion dollars.

Note 3

For continuous compounding formula verification, look at L'Hopital's rule.

Let's try a problem.

Example 3—

Suppose we have $100,000 invested at 10 percent.

A. How much would you have after 10 years, compounding yearly? continuously?

B. When would you double your money, compounded yearly? continuously?

3A.

That's a difference of $12,453.93. Now all we need is the $100,000.
3B.

Continuous compounding does pay.