Business I / Differential Equations
Practice question · True or false

Two deposits obey the same ODE x˙=0.05x\dot{x} = 0.05x but start at different amounts. Their balance curves will eventually cross.

Hints
  1. Both curves are the same shape scaled by their starting values.
  2. One scaled copy of a positive curve can never overtake a larger one.
Show the answer

False

Why

Solutions of the same first-order ODE through different initial conditions never cross: both are x0e0.05tx_0 e^{0.05t} with different x0x_0, and their ratio stays constant forever. In pure compounding, a head start is permanent.

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