Q 1 Mark became overextended in his gambling debit and could

Q 1.

Mark became overextended in his gambling debit and could not pay $1000 he owed. jack the person who loaned him money , said he could have three weeks to pay off the $1000 at 15.9% interest per week.

a) Assuming the interest is compounded continuosly give the formula for the amount he owes as a function of time (t)

b) Use the formula to find how much Mark owes at the end of three weeks.

Solution

Principal = $ 1000 ; rate per week = 0.159

Compunded continously :

a) Amount = Principal[e^(rate*no. of weeks)]

= 1000[e^(0.159*n)

b) At th end of 3 weeks ; n = 3

A(n) = 1000e^(0.159*3)

=1000*1.611 = $1611