Homework 15:
Due Wednesday 7/16/14
1. Write down the function for compounded interest and explain what b, r, n, and t
represent.
2. If I borrow a loan from the bank of $6,000 and they charge me interest that is
compounded monthly with an APR of 5%, express the amount of money I owe as a
function of the number of years since I took out the loan. (Hint: This is the same kind
of problem that we did in class except instead of earning interest from a savings account
I have to pay interest from a loan.)
3. In the above problem, how much money would I owe the bank in 10 years?
4. Write down the function for continuously compounded interest and explain what b, e,
r, and t represent.
5. Do problem 2 again but this time assume the interest is compounded continuously
instead of monthly.
6. How much money would I owe the bank in 10 years if the interest was compounded
continuously?
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