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.
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Famous quotes containing the words interest in, interest and/or mathematics:
“The interest in life does not lie in what people do, nor even in their relations to each other, but largely in the power to communicate with a third party, antagonistic, enigmatic, yet perhaps persuadable, which one may call life in general.”
—Virginia Woolf (1882–1941)
“The moral sense is always supported by the permanent interest of the parties. Else, I know not how, in our world, any good would ever get done.”
—Ralph Waldo Emerson (1803–1882)
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Than Tycho Brahe, or Erra Pater:
For he, by geometric scale,
Could take the size of pots of ale;
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And wisely tell what hour o’ th’ day
The clock doth strike, by algebra.”
—Samuel Butler (1612–1680)