Continuous Growth and the Number e LeTourneau 不断增长数e 莱图尔诺.pptVIP

Continuous Growth and the Number e Lesson 3.4 Compounding Multiple Times Per Year Given the following formula for compounding P = initial investment r = yearly rate n = number of compounding periods t = number of years Compounding Multiple Times Per Year What if we invested$1000 for 5 yearsat 4% interest Try the formula for different numbers of compounding periods Monthly Weekly (n = 52) Daily (n = 365) Hourly (n = 365 * 25) Compounding Multiple Times Per Year You should see that we seem to reach a limit as to how much multiple compounding periods increase the final amount So we come up with continuous compounding Using e As the Base We have used y = A * Bt Consider letting B = ek Then by substitution y = A * (ek)t Recall B = (1 + r) (the growth factor) It turns out that Continuous Growth The constant k is called the continuous percent growth rate For Q = a bt k can be found by solving ek = b Then Q = a ek*t For positive a if k 0 then Q is an increasing function if k 0 then Q is a decreasing function Continuous Growth For Q = a ek*t Assume a 0 k 0 k 0 Continuous Growth For the functionwhat is thecontinuous growth rate? The growth rate is the coefficient of t Growth rate = 0.4 or 40% Graph the function (predict what it looks like) Converting Between Forms Change to the form Q = A*Bt We know B = ek Change to the form Q = A*ek*t We will eventually discover that k = ln B Assignment Lesson 3.4 Page 133 Exercises 1 – 25 odd * What phenomenon do you notice?