Maximiliano wants to save the $3000 that he earned over the summer. He could invest the money at 5% simple interest, and then after t years he would have A_s = 3000(1 + 0.05t) dollars. But he could also invest the money at 5% compounded semiannually, and then after t years he would have A_c = 3000(1.025)^t dollars.

(a) As the number of years increases, show that

(b) What does this limit mean in terms of Maximiliano’s potential investment?

Transcribed Image Text:

lim → As Ac = 0.