Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

a,b,c,d The applet above shows the graph of the continuous compounding model A(t)=2500e0.0634t in green with point G giving the value of the account t

image text in transcribed

image text in transcribed

image text in transcribed

a,b,c,d

The applet above shows the graph of the continuous compounding model A(t)=2500e0.0634t in green with point G giving the value of the account t years after the investment of $2,500 was made. Answer in COMPLETE SENTENCES. (part a) Recall that earlier in the course we learned that exponential functions with the natural base e could be rewritten as base b exponential functions, and vice versa. When we apply this approach to A(t), we see that A(t)=2500e0.0634tA(t)=2500(1.06545)t From these functions, we can determine the continuous growth rate of A and the annual (actual) growth rate of A. Since A models the growth of the value of the account, we can relate the ideas of the growth rates to the APR and APY in our exponential financial models. Copy and paste the template into the answer box below. Find the APR and APY percentages for the model A(t). The first blank in each sentence should be completed with either "APR" or "APY." The is the continuous growth rate and is equal to The is the annual (actual) growth rate and is equal % %. (part b) Use the input boxes for the compound interest function B(t) (in red) to model the growth of $2,500 with an APR of 6.34% compounded 1 time per year. Once the values are entered, drag the slider for n to the right, increasing the compounding periods to the maximum allowed in the applet. What happens to the compound interest (RED) graph in relation to the continuous compounding (GREEN) graph? Considering all the possible choice of n, how do the future values of these accounts compare? (part d) Use the applet above to determine how much should invested at 7.9% simple interest if the future value given by A(11) matches the simple interest investment in 11 years. Note that t function labeled S(t) (in purple) will provide the future values for the simple interest model. In other words, you want to find the principal amount invested under simple interest so tha A(11)=S(11). Enter the 7.9% simple interest in the appropriate input box and experiment with principal amount until S(11) matches A(11) to the nearest cent

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Accounting

Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik

10th edition

0-07-794127-6, 978-0-07-79412, 978-0077431808

Students also viewed these Accounting questions