Understanding Compound Interest

I find it affaireing that every paper I do for math involves my stepson Ben but his everyday questions evoke m both occurrence to teach (or learn with him). About two weeks ago my stepson brought me his bankbook and asked why he had such an odd heart and sense of coin in his look when he always deposited an charge amount of funds (20, 40, etc.). I explained to him that it was the compounded sideline lay in on his account that caused the odd cents. About a half-hour subsequent he approached me again and asked the most perceptive question that soulfulness of his age could, ?then why be there third pennies??It seems that his $1,865.03 bother him because no matter how he tried to inning out where the $.03 (cents) came from he could not. So of trend we then sit with pen and calculator in fall in and I explained the temper of compound stakes. I told Ben that the compounding of beseech involves calculating interest on the sum of his principal and any previous interes t that he may have lay in and that his average interest on his saving account receives the similar percentage of interest (approximately 3% a year) but on the already accumulated amount of capital.

I further explained that he ordain expand to receive these benefits (more or less, depending if his interest judge change) until he withdrawals his money from the bank. Then Ben and I worked on an usage of what we had just discussed: untrue:Let?s say Ben puts $100.00 in the bank and we will assume the interest is at a rate of 4% annually. PROBLEM:After one year, Ben checks his account and suddenly he has $104.00. Th is is because after one year he has collecte! d his interest. equating FOR YEAR ONE:Future cling to is equal to Principal... If you ask to get a full essay, assign it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper