This is part of the HSC Mathematics Advanced course under the topic of Financial Mathematics: Financial applications of sequences and series.
In this post, we will explore exponential growth and decay problems.
To do this we will use geometric sequences to model and analyse practical problems involving exponential growth and decay. This includes:
- Calculate the effective annual rate of interest and use results to compare investment returns and cost of loans when interest is paid or charged daily, monthly, quarterly or six-monthly
- Solve problems involving compound interest loans or investments, eg determining the future value of an investment or loan, the number of compounding periods for an investment to exceed a given value and/or the interest rate needed for an investment to exceed a given value.
Geometric Sequence Growth and Decay
Explanation of the Effective Annual Rate of Interest (EAR)
How to Calculate the Effective Annual Rate of Interest (EAR)
