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    2.4 Checkpoint: Continuous Compounding

1.     How much money is an account after 8 years if you deposit $1500 in an account giving

        5.5% interest compounded continuously?

2.    How much money is an account after 2 years if you deposit $4500 in an account giving

       4.5% interest compounded continuously?

3.   How much money is an account after 40 years if you deposit $2000 in an account giving

      6.5% interest compounded continuously?

4.    How much money would you need to invest now in an account that gives 4% interest  compounded continuously if you want to have $5000 in this account in 5 years?

5.       It can be shown that , where the approximation

        improves as more terms are included.

1. Use your calculator to find the sum of the five terms above

2. Find the sum of the first seven terms

3. Compare your sums with the calculator’s displayed value for e  (which you can find be entering  ) and state the number of correct digits in te five and seven term sum.

4. How many terms of the sum are needed in order to give a nine decimal digit approximation equal to the calculator’s displayed value for e?  *

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*NOTE: Problem #5 from Connally, Hughes-Hallett, Gleason et al. Functions Modeling Change. A Preparation for Calculus.  New York:  John Wiley & Sons, 2000, p. 178.