4. Two savings accounts each start with a $200 principal and have an interest rate of 5%. One account earns simple interest and
1 answer:
Answer:
The compounded annually account will earn more interest over 10 years
Step-by-step explanation:
The rule of the simple interest is I = Prt, where
- P is the original value
- r is the rate in decimal
- t is the time
The rule of the compounded interest is A = P, where
- A is the new value
- P is the original value
- r is the rate in decimal
- n is the number of periods
- t is the time
The interest I = A - P
∵ Each account start with $200
∴ P = 200
∵ They have an interest rate of 5%
∴ r = 5% = 5 ÷ 100 = 0.05
∵ One account earns simple interest and the other is compounded
annually
∴ n = 1 ⇒ compounded annually
∵ The time is 10 years
∴ t = 10
→ Substitute these values in the two rules above
∵ I = 200(0.05)(10)
∴ I = 100
∴ The simple interest = $100
∵ I = A - P
∵ A = 200
∴ A = 325.7789254
∵ I = 325.7789254 - 200
∴ I = 125.7789254
∴ The compounded interest = $125.7789254
∵ The simple interest is $100
∵ The compounded interest is $125.7789254
∵ $125.7789254 > $100
∴ The compounded annually account will earn more interest
over 10 years
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Answer:
a)
b)
The values are too small since is positive for both values of
in. I'm speaking of the
values, 2.9 and 3.1.
Step-by-step explanation:
a)
The point-slope of a line is:
where is the slope and
is a point on that line.
We want to find the equation of the tangent line of the curve at the point
on
.
So we know .
To find , we must calculate the derivative of
at
:
.
So the equation of the tangent line to curve at
is:
.
I'm going to solve this for .
Subtract 5 on both sides:
What this means is for values near
is that:
.
Let's evaluate this approximation function for .
Let's evaluate this approximation function for .
b) To determine if these are over approximations or under approximations I will require the second derivative.
If is positive, then it leads to underestimation (since the curve is concave up at that number).
If is negative, then it leads to overestimation (since the curve is concave down at that number).
is positive for
.
is negative for
.
That is, .
So is positive for both values of
which means that the values we found in part (a) are underestimations.