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11-9.

Review the Math Notes box in this lesson about continuously compounded interest.

1. Calculate the amount Tabitha had after investing her $10,000$ for one year at $3\%$ annual interest, compounded continuously. How does this compare with her hourly compounding result of $10,304.56$?

Remember to simplify within the parentheses before solving the exponent.

2. Suppose a large investment group invested $10$ billion dollars at $8\%$ annual interest. Compare the amount they would have in one year if the interest were compounded continuously with the amount they would earn if the interest were compounded daily.

$10,832,870, 680$ and $10,832,775,720$
Now find the difference.

3. Which investors might benefit from continuous compounding, rather than daily compounding?

Is it better to have a larger starting amount or a smaller amount?