What is logarithmic growth? If you put 100 dollars in a savings account every two months...

What is logarithmic growth? If you put 100 dollars in a savings account every two months from age 15 until age 50, and this account earned 6% annually, could you retire at age 50?

Expert Solution

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log-returns is considering the return of a single asset over time. Log-returns are preferable for stocks.

log-returns are good to use in algorithms. Which is crucial for many stock market assessing software.

Log returns have more stable distribution then arithmetic returns.

Log return is based on continuous compounding.

Formula: The Future Value of an ordinary annuity (FV)

FV= C× {[(1+r)^n]-1}/r

FV = Future value (The cumulative amount available in Future)

C= Periodic cash outflow. 100

r =effective interest rate for the period. [(e^(6%/12)]-1 = 0.50125%

n = number of periods. 210

FV= 100× {[(1+0.0050125)^210]-1}/0.0050125

FV = $37,060.

Balance at age of 50 = $37,060

jeff jeffy answered 3 years ago

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