Question
Assume you deposit $1 in an account that is growing at an annual effective interest rate in year n equal to in. Prove: (a)
Assume you deposit $1 in an account that is growing at an annual effective interest rate in year n equal to in. Prove: (a) If in = 1 then the amount in the account will grow without bound. n 1 (b) If in then the amount in the account will have an upper bound, and will not grow to infinity. (You do not need to find the bound, only show that it exists) n = (Note on marking scheme. This question is only worth 2 marks not because it is easy, but because it is hard and involves some mathematical thinking outside this course. In order not to penalize students who are unable to make too much progress, this question has a low point weight in the assignment.)
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Principles of Finance
Authors: Scott Besley, Eugene F. Brigham
6th edition
9781305178045, 1285429648, 1305178041, 978-1285429649
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