We have seen that if we invest an amountA

at an annual interest rater

compoundedn

times in a year then after one year we would haveA(1+r

n

)

n

.

What is the approximate rate of change of our money? If we consider the first1

period of a year in which our money goes fromA

toA(1+r

n

)

then the change in money is

We have seen that if we invest an amountA at an annual interest rate r compounded n times in a year then after one year we would have A(1 + % )n. What is the approximate rate of change of our money? If we consider the rst 1 period of a year in which our money goes from A toA (1 + %) then the change in money is AA = A (1 + g) A = while the length of the time period (in years) is So the rate of change of money per time is the quotient of these two, which is M: 4E5]