Practice question · Multiple choice
Which spreadsheet formula computes continuous compound interest ?
Hints
- Continuous compounding uses the exponential function.
- Discrete compounding would raise one plus the rate to a power instead.
Show the answer
B. =1000*EXP(0.05*10)
Why
EXP() computes . The formula =1000*EXP(0.05*10) = =1000*EXP(0.5) gives continuous compounding. Option C gives discrete compounding; option D uses the wrong function.
Practise First-Order Differential Equations
The app has 5 more questions on this lesson, and keeps your place in the course. Business I is free to start.
More questions on First-Order Differential Equations
- Sort these into growth models vs decay models.
- y = y0 e^kt solves doty = ky because the exponential is its own derivative up to a constant.
- At 7% continuous growth, the Rule of 70 says doubling time is roughly 70/7 = 10 years. Estimate e⁰.7.
- An exponential decay model stays accurate all the way down to the last few units of the quantity.
- Half-life from a decay rate k is computed as ln 2 / |k| rather than 2/k. Why does a logarithm appear?
- Match each ODE to its economic model.
- A separable differential equation and a non-separable one may describe equally simple business situations.…