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Math Help - Exponential Functions Help

  1. #1
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    Exponential Functions Help

    A quick and easy way to calculate the rate of return without using a calculator is the "Rule of 72".Basically,you have the product of the interest rare(i),expressed as a percentage,and the number of compounding periods(n) equal to 72.These Values are then substituted in the compounding formula A=P(1+i)^n where P=1.Once calculated,you will notice the value of A can be rounded to a consistent integer value.
    a)Complete a table of values for i,n and A=P(1+i)^n where i is from 1 to 15,A calculated to 3 Decimal Places.

    b)What is the rounded integer value?What does it mean?
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  2. #2
    Member oldguynewstudent's Avatar
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    Quote Originally Posted by CoolBoy View Post
    A quick and easy way to calculate the rate of return without using a calculator is the "Rule of 72".Basically,you have the product of the interest rare(i),expressed as a percentage,and the number of compounding periods(n) equal to 72.These Values are then substituted in the compounding formula A=P(1+i)^n where P=1.Once calculated,you will notice the value of A can be rounded to a consistent integer value.
    a)Complete a table of values for i,n and A=P(1+i)^n where i is from 1 to 15,A calculated to 3 Decimal Places.

    b)What is the rounded integer value?What does it mean?
    I believe you have the problem stated incorrectly.

    A should round to the number 2.

    The correct formula is 2P = PeYr ; so with P=1, A should equal 2 if you multiply by e raised to i times n.

    The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years

    See the following link

    The Rule of 72 (with calculator) - Estimate Compound Interest
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