Compound Interest and e (part 3)

Continuously compounding $P in principal at an annual interest rate of r for a year ends up with a final payment of $Pe^r

Category:

Education

Tags:

• continuous
• compounding
• interest
• math
• finance

[redthunder3979]

too bad they do not teach this in school

let me say that again

too bad people don't learn this in school

[Trangalanga]

school doesnt teach it the same way that sal does

[poolhalljunkie2013]

you lost me at 1/x= r/n, you defined that r= interest rate, n= how many times compounded. but what does X=??

[Thornshadow17432]

Press 9 over and over again for beatboxing.

[deltasworder1x]

All of my questions involve find the interest. No one goes over that!

[orange1872003]

I have noticed that people seem to continuously comment about this particular subject not being covered in school. Being that I received my early education from a public school, I can understand the confusion and concern surrounding this question.

I think a more appropriate approach to the question would by WHY is this topic not covered, or covered in great detail, in public schools.

Could it be......the economy, as we know it, probably wouldn't exist if students were properly educated

[Acerola211]

Small thing - Should be 100r% instead of 10r%.

I love these videos! I'm a cellular and molecular biology major watching these for fun, I'm sure these will be extremely useful once I enter the work force and will have to finance myself.

[caswellmiles]

Mr. Kahn please excuse but address my confusion:

I'm confused by the statement that x = r /n or that X= annual interest rate/periods per year. This would mean that X is 5%.

You just defined X as the PAYMENT in one period X= P(1+r/n) = $50*(1.05) = $52.50.

How does x as $52.50, a specific number equal x as 5%, a relative number?

[ProjectD13X]

love these videos, so helpful in every subject you teach

[ProjectD13X]

@vickiormindyb e is a number, if you graph out y=(1+1/x)^x it will have an asymptote of 2.71so on and so fourth and a scientific calculator hit 2nd LN and youll get e

[parklinkin52]

Sal don't those people reciting e and pi just memorise the digits rather than tapping into some kind of universal memory as you seem to be suggesting?

Of course, anyone who can recite 22514 digits is a freak, but it just shows their amazing powers of numeracy and memory right?

[parklinkin52]

Sal many of the comments here are true: textbooks and schools are useless at teaching this stuff, so how did you get so damn good at it?