Compound Interest
You deposit $800 in a savings account that earns 6% annual interest compounded every bi-monthly. Write a function that represents the balance after years. Hint: It is the same steps as Example 5. If the annual interest is compounded bi-monthly, what is your ?
Compound Interest (a more general definition)
The formula for computing compound interest is , where is the final amount, is the initial principal balance, is the rate for a unit of time, is the number of times compounded in one unit of time, and is the time elapsed.
What is the amount in a bank account that initially has $1000 and has a yearly interest rate of 2% compounding quarterly after 2 years?
But what happens to the output value as the interest compounds more and more frequently? We let ,, and for simplicity.
What appears to happen to the compound interest?