Follow the same steps to compare yearly, monthly, and daily compounding for a bank giving 100 interest (in a time of severe inflation) Why do you think compound interest makes a bigger difference when the interest rate is higher The procedure banks use to compute continuously compounded interest is...

With yearly compounding youd get 20 1000 200000 With monthly compoun ...

Follow the same steps to compare yearly, monthly, and daily compounding for a bank giving 100% interest

Question:

Follow the same steps to compare yearly, monthly, and daily for a bank giving 100% interest (in a time of severe inflation). Why do you think makes a bigger difference when the interest rate is higher?
The procedure banks use to compute continuously compounded interest is similar to the process we used to derive a differential equation. Suppose several banks claim to be giving 5% annual interest and that you have $1000 to deposit.
Compound Interest
Compound interest (or compounding interest) is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan. Thought to have originated in 17th century Italy, compound... Compounding
Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will...