Exploring Compound Interest and the Natural Base, e

The video tutorial covers compound interest, explaining its formula and variables. It includes examples of calculating compound interest with different compounding frequencies, such as quarterly and bi-monthly. The tutorial also explores the natural base e, its properties, and its application in continuously compounded interest problems. The video emphasizes the importance of not rounding intermediate calculations and provides guidance on using calculators for these computations.

What does the variable 'P' represent in the compound interest formula?

• Number of times interest is compounded

• Principal amount

• Interest rate

• Ending amount

If interest is compounded quarterly, what is the value of 'n' in the formula?

• 1

• 2

• 12

• 4

How do you convert a percentage to a decimal for use in the compound interest formula?

• Add 0.01

• Subtract 0.01

• Divide by 100

• Multiply by 100

What is the result of the compound interest calculation for Sadie's investment after 4 years?

• $800.00

• $1000.00

• $600.00

• $731.93

In the problem where the principal is unknown, what is the correct formula manipulation to solve for 'P'?

• Divide both sides by the compound expression

• Multiply both sides by the rate

• Subtract the final amount from both sides

• Add the rate to both sides

What happens to the value of the compound interest formula as 'n' increases indefinitely?

• Decreases steadily

• Approaches the value of e

• Approaches one

• Approaches zero

What is the value of e to the nearest thousandth?

• 2.718

• 3.142

• 1.618

• 1.414

How much will Monica have in her account after 20 years with continuous compounding?

• $11,204.22

• $5,292.50

• $10,000.00

• $15,000.00

What is the principal amount Chad invested in his continuously compounded interest account?

• $100

• $175

• $150

• $125

What is the final amount withdrawn by Chad after 22 years?

• $250.00

• $500.00

• $400.00

• $359.36