Question

Peter invests $ 100000 in an account that pays 12 % annual interest : the interest is paid once , at the end of the year . Martha invests $ 100000 in an account that pays 12 % annual interest , compounding monthly at the end of each month . At the end of one full year , compared to peter ' s account , approximately how much more does martha s account have ?

Answer 1

Cm,n=m!/((m-n)!*n!);

Cm,2=(m-1)*m/2;

------Step2----------

(1+a/b)^c=1+c*a/b+(Cc,2)*a^2/b^2+...;

eg.

(1+12/1200)^12~=

1+12*12/1200++C12,2*12^2/1200^2~=

1+0.12+0.0066=

1.1266;

1.1266-(1+12/100)=0.0066;

0.0066*100000=660 -> C;

:) :) :)

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