A principal amount P0 is deposited in a bank account earning 3% interest compounded monthly. After...

A principal amount P0 is deposited in a bank account earning 3% interest compounded monthly. After 20 years there is $1000 in the account. What was the principal P0?
Suppose you want to buy a house for $300, 000, but you only have $100,000. You are able to make an investment that pays 7.3% annual interest. If the interest is compounded continuously, how long will it take before you can buy your new house?
You are made an offer. You can have $1 million in cash, or you can get a penny today. But then the next day you will get two pennies, the day after that 4 pennies, and so on, the number of pennies doubling each day, for one month.

(a) Explain why the number of pennies on the nth day is 2n.
(b) How long will it take for the quantity of pennies to exceed $1 million worth?

(c) Should you take the million or the penny?

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Expert Solution

milcah answered 1 year ago

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