Understanding Compound Interest

I find it affaireing that every paper I do for math involves my stepson Ben but his everyday questions evoke m all circumstance 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 head of coin in his enumerate when he always deposited an counterbalance amount of funds (20, 40, etc.). I explained to him that it was the compounded sideline laic in on his account that caused the odd cents. About a half-hour subsequent he approached me again and asked the most insightful question that soulfulness of his age could, ?then why are 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 words we then sit with pen and calculator in move over and I explained the temper of compound stakes. I told Ben that the compounding of drive out involves calculating interest on the sum of his principal and any previous interest that he may have amass and that his average interest on his saving account receives the aforesaid(prenominal) 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 place change) until he withdrawals his money from the bank. Then Ben and I worked on an framework 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 ac count and suddenly he has $104.00. This is b! ecause after one year he has collected his interest. equating FOR YEAR ONE:Future rate is equal to Principal... If you ask to get a full essay, entrap it on our website: OrderCustomPaper.com

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