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by Christopher J. Burke
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for a random comic |
And I thought we could transcend all our differences...
It's been a while since I've been really, really mathy in one of these strips, so allow me to explain the Continuous compounding interest problem. Basically, if you saved $1 at an interest rate of 100% (great rate, isn't it?! That's why so much of math is theoretical although it has alleged practical applications -- but I digress), after one year that $1 becomes $2. However, if that interest was compounded ever six months, after one year you would have $2.25 instead.
And so on. As you see, the more often the interest is compounded, the more you get.
It would seem that your $1.00 could grow into millions given enough compounding, but in fact, it'll never yield more than $2.72, and not because of greedy corporations, but because the smaller and smaller decimals you are dealing with will converge on a number beginning with 2.71828?18284?59045?23536. A guy named Euler gave this number the imaginative name "e", not to be confused with the most frequently occurring letter in the English language, which just happed to be the first letter of his last name. (You can also go there to leave comments!) |
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