Interest - Interest in Mathematics

Interest in Mathematics

It is thought that Jacob Bernoulli discovered the mathematical constant e by studying a question about compound interest. He realized that if an account that starts with $1.00 and pays say 100% interest per year, at the end of the year, the value is $2.00; but if the interest is computed and added twice in the year, the $1 is multiplied by 1.5 twice, yielding $1.00×1.5² = $2.25. Compounding quarterly yields $1.00×1.254 = $2.4414…, and so on.

Bernoulli noticed that if the frequency of compounding is increased without limit, this sequence can be modeled as follows:

,

where n is the number of times the interest is to be compounded in a year.

Read more about this topic:  Interest

Famous quotes containing the words interest in, interest and/or mathematics:

    I have an intense personal interest in making the use of American capital in the development of China an instrument for the promotion of the welfare of China, and an increase in her material prosperity without entanglements or creating embarrassment affecting the growth of her independent political power, and the preservation of her territorial integrity.
    William Howard Taft (1857–1930)

    Parents’ accepting attitudes can help children learn to be open and tolerant. Parents can explain unfamiliar behavior or physical handicaps and show children that the appropriate response to differences should be interest rather than revulsion.
    Dian G. Smith (20th century)

    It is a monstrous thing to force a child to learn Latin or Greek or mathematics on the ground that they are an indispensable gymnastic for the mental powers. It would be monstrous even if it were true.
    George Bernard Shaw (1856–1950)