Concept explainers
a.
Calculate the equation of the model of the growth of each investment and use a graph to draw the model over a
a.
Answer to Problem 77E
The equation of the three model of investment are
Explanation of Solution
Given:
It is given in the question that there are three options for investing
Concept Used:
In this ,use the concept of compound interest and the formula used is
Calculation:
Since,Initial amount,
For compounded annually, use
For quarterly compounding , use the same formula with
For continous compounding ,use the formula of
Now,the graph of the three model in the same viewing window is :
The red curve shows the equation of compounded annually.
The green curve shows the equation of compounded continouslly.
The blue curve shows the equation of compounded quarterly.
Conclusion:
The equation of the three model of investment are
b.
Find the investment that yields the highest return after
b.
Answer to Problem 77E
The investment in continuous compounding yields the highest return.The difference is
Explanation of Solution
Given:
It is given in the question that the three equation is
Concept Used:
In this ,use the concept of compound interest and the formula used is
Calculation:
From the graph obtained in part (a) , the continuous one yield the highest return ,as it will always do for the same interest rate.
But it has to be , put
The quarterly yields
The continuous yields
Conclusion:
The investment in continuous compounding yields the highest return.The difference is
Chapter 3 Solutions
Precalculus with Limits: A Graphing Approach
- Calculus: Early TranscendentalsCalculusISBN:9781285741550Author:James StewartPublisher:Cengage LearningThomas' Calculus (14th Edition)CalculusISBN:9780134438986Author:Joel R. Hass, Christopher E. Heil, Maurice D. WeirPublisher:PEARSONCalculus: Early Transcendentals (3rd Edition)CalculusISBN:9780134763644Author:William L. Briggs, Lyle Cochran, Bernard Gillett, Eric SchulzPublisher:PEARSON
- Calculus: Early TranscendentalsCalculusISBN:9781319050740Author:Jon Rogawski, Colin Adams, Robert FranzosaPublisher:W. H. FreemanCalculus: Early Transcendental FunctionsCalculusISBN:9781337552516Author:Ron Larson, Bruce H. EdwardsPublisher:Cengage Learning