T/TH 9:30-10:50AM
LASA 1: Compound Interest
1.) Result of calculations. P(t) = P(0) e^(kt) P(0) = $1000.00 K = 0.5% = 0.005 | K = 1% = 0.01 | K = 1.5% = 0.015 | P(1) = 1005.01 | P(1) = 1010.50 | P(1) = 1015.11 | P (5) = 1025.32 | P(5) = 1051.27 | P(5) = 1077.88 | P (10) = 1051.27 | P(10) = 1105.17 | P(10) = 1161.83 |

Time (T(k)) when your investment is doubling K= 0.5% | T(0.5%) | Round to whole number = 139 years | Round to tenths=138.6 | K=1% | T(1%) | Round to whole number = 69 years | Round to tenths= 69.3 | K=1.5% | T(1.5%) | Round to whole number = 46 years | Round to tenths= 46.2 | 2.) What affect did changing the interest rate have on the rate at which your investment grew? Changing the interest rate from 0.5% to 1% to 1.5% increased the rate overall of the investment such that when the interest rate was 1% at 5 years the amount of 1051.27 which increased to the amount of 1077.88 at the same year at a higher interest rate of 1.5%. As the interest rate grew higher and higher, the rate of the investment also grew higher.
3.) What affect did changing the interest rate have on the doubling time (time until your deposit doubled in size)? When the interest rate was lower, the number of years at which the investment doubled from $1000.00 to $2000.00 was higher. In my opinion, doubling the amount at the interest rate of 0.5% is somewhat unrealistic because the amount of years it is taking is almost 139 years which is not possible for a person life. When the interest rate was higher, the number of years was lower such that at the interest rate of 1.5% it took about 46 years for the amount to double from $1000.00 to $2000.00.
4.) Assume that this money is being invested in a savings account. Are the interest rates we selected realistic for such an account today? The interest rate depends on the type of savings account you have.