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Math Help - growth rate and annual yield

  1. #1
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    growth 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!
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  2. #2
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    Quote Originally Posted by sksksk View Post
    Find the effective annual yield and the continuous growth rate if Q= 5500e^.19t

    having trouble understanding this section of the chapter. please help!
    The annual yield is the return (expressed as a decimal fraction or percentage) over 1 year:

    Initial investment = 5500 \ e^{0.19 \times 0}=5500
    Value after 1 year = 5500 \ e^{0.19 \times 1}\approx 6651

    Therefor the effective annual yield is = \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 0.19 or 19 \%

    RonL
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    thank youuuuuuuu
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