Assignment 2: LASA 1: Compound Interest
A common component of investing money is to take advantage of a financial institution’s willingness to pay compound interest. Compound interest is basically interest paid on a deposit that continually accumulates interest. In general, the formula for compound interest can be represented by the following exponential function:
In this formula, P(t) represents the total money in the account after t years given the interest rate k which is compounded continuously. In this assignment, you will use this formula to explore the affect that compound interest can have over a period of time and at different interest rates.
Directions:
In a Microsoft Word document, prepare a report that includes answers to the following:.
By Wednesday, July 1, 2015, submit your assignment to the M3: Assignment 2 Dropbox.
All written assignments and responses should follow APA rules for attributing sources.
Assignment 2 Grading Criteria 
Maximum Points

Calculated the growth of an investment compounded continuously at rate k = 0.5% over time intervals of 1, 5, and 10 years. 
40

Calculated the growth of an investment compounded continuously at rate k = 1% over time intervals of 1, 5, and 10 years. 
40

Calculated the growth of an investment compounded continuously at rate k = 1.5% over time intervals of 1, 5, and 10 years. 
40

Determined the doubling time for an investment compounded continuously at interest rates of k equal to 0.5%, 1%, and 1.5%. 
40

Explained the result that changing the interest has on the rate at which an investment grows. 
10

Critically compared the simple method of calculating compound interest to those used at a typical financial institution. 
10

Investigated other types of investment accounts and methods used to calculate compound interest at a typical financial institution. 
10

Compared and contrasted the calculation of simple interest and compound interest. 
10

Total: 
200
