OPEN ENDED Give an example of an exponential equation that requires using natural
logarithms instead of common logarithms to solve.Writing in Math Use the information about banking on page 556 to explain how the natural base e is used in banking. Include an explanation of how to calculate the value of an account whose interest is compounded continuously, and an explanation of how to use natural logarithms to find the time at which the account will have a specified value in your answer. Continuously Compounded Interest
2
2.4414…
GET READY for the Lesson
Suppose a bank compounds
interest on accounts continuously,
that is, with no waiting time
between interest payments.
To develop an equation to
determine continuously
compounded interest, examine
what happens to the value A of
an account for increasingly larger
numbers of compounding
periods n. Use a principal P of $1,
an interest rate r of 100% or 1,
and time of 1 year
2.6130…
2.7145…
A=P(19)”
(yearly) (1)
(quarterly) (1* !)
(monthly) (1)
(daily) (1)
Chourly) (1)
2.7181.
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