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  3. a principal amount p0 is deposited in a bank accou

A principal amount P0 is deposited in a bank account earning 3% interest compounded monthly. After...

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Basic Math

  1. A principal amount P0 is deposited in a bank account earning 3%interest compounded monthly. After 20 years there is $1000 in theaccount. What was the principal P0?

  2. Suppose you want to buy a house for $300, 000, but you only have$100,000. You are able to make an investment that pays 7.3% annualinterest. If the interest is compounded continuously, how long willit take before you can buy your new house?

  3. You are made an offer. You can have $1 million in cash, or youcan get a penny today. But then the next day you will get twopennies, the day after that 4 pennies, and so on, the number ofpennies doubling each day, for one month.

    (a) Explain why the number of pennies on the nth day is2n.
    (b) How long will it take for the quantity of pennies to exceed $1million worth?

    (c) Should you take the million or the penny?

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