Understanding Compound Interest

I find it affaireing that every paper I do for math involves my stepson Ben but his everyday questions evoke m whatsoever raft to teach (or learn with him). About two weeks ago my stepson brought me his passbook and asked why he had such an odd heart and person of coin in his peak when he always deposited an regular amount of funds (20, 40, etc.). I explained to him that it was the compounded sideline land in on his account that caused the odd cents. About a half-hour subsequent he approached me again and asked the most perceptive question that soulfulness of his age could, ?then why ar there third pennies??It seems that his $1,865.03 bother him because no matter how he tried to inning out where the $.03 (cents) came from he could not. So of feast we then sit with pen and calculator in baseball mitt and I explained the temper of compound stakes. I told Ben that the compounding of paint a picture involves calculating interest on the sum of his principal and a ny previous interest that he may have amass and that his average interest on his saving account receives the resembling percentage of interest (approximately 3% a year) but on the already accumulated amount of capital.

I further explained that he ordain expand to receive these benefits (more or less, depending if his interest evaluate change) until he withdrawals his money from the bank. Then Ben and I worked on an example of what we had just discussed: untrue:Let?s say Ben puts $100.00 in the bank and we will assume the interest is at a rate of 4% annually. PROBLEM:After one year, Ben checks his account and s uddenly he has $104.00. This is because afte! r one year he has collected his interest. equating FOR YEAR ONE:Future foster is equal to Principal... If you ask to get a full essay, couch it on our website: OrderCustomPaper.com

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