Find the effective annual yield and the continuous growth rate if Q= 5500e^.19t

having trouble understanding this section of the chapter. please help!

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- Sep 21st 2007, 08:34 AMskskskgrowth rate and annual yield
Find the effective annual yield and the continuous growth rate if Q= 5500e^.19t

having trouble understanding this section of the chapter. please help! - Sep 21st 2007, 10:32 AMCaptainBlack
The annual yield is the return (expressed as a decimal fraction or percentage) over 1 year:

Initial investment $\displaystyle = 5500 \ e^{0.19 \times 0}=5500 $

Value after 1 year $\displaystyle = 5500 \ e^{0.19 \times 1}\approx 6651 $

Therefor the effective annual yield is = $\displaystyle \left[\frac{6651-5500}{5500}-1\right]\times 100 = 20.9 \%$

The continuous growth rate is the constant in the exponential so in this case is $\displaystyle 0.19$ or $\displaystyle 19 \%$

RonL - Sep 21st 2007, 10:47 AMsksksk
thank youuuuuuuu