The formula for the amount (A) in a savings account compounded n times per year for t years at an annual interest rate r, with initial deposit P, is given by A=P(1+r/n)^nt. Evaluate this formula as the number of compoundings per year becomes infinite. (the number "e" should show up)

asked by Nick

9 years ago

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1 answer

recall that

lim (1+1/n)^n = e
n->∞

answered by Steve

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The formula for the amount (A) in a savings account compounded n times per year for t years at an annual interest rate r, with initial deposit P, is given by A=P(1+r/n)^nt. Evaluate this formula as the number of compoundings per year becomes infinite. (the number "e" should show up)

1 answer

recall that

lim (1+1/n)^n = e
n->∞

Steve · Answer

recall that lim (1+1/n)^n = e n->∞