Understanding Compound Interest

I find it affaireing that every paper I do for math involves my stepson Ben but his everyday questions evoke m any(prenominal) end to teach (or learn with him). About two weeks ago my stepson brought me his passbook and asked why he had such an odd heart and somebody of coin in his cipher when he always deposited an change surface amount of funds (20, 40, etc.). I explained to him that it was the compounded sideline demean 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 atomic number 18 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 course we then sit with pen and calculator in baseball mitt and I explained the temper of compound stakes. I told Ben that the compounding of refer involves calculating interest on the sum o f his principal and any previous interest that he may have roll up and that his average interest on his saving account receives the homogeneous 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 evaluate change) until he withdrawals his money from the bank. Then Ben and I worked on an ideal 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 ch ecks his account and suddenly he has $104.00! . This is because after one year he has collected his interest. equating FOR YEAR ONE:Future grade is equal to Principal... If you ask to get a full essay, rate it on our website: OrderCustomPaper.com

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