In the New Testament, Jesus commends a widow who contributed...

Name: Problem 61, Chapter 5: Finite Mathematics and Calculus with Applications
Uploaded: 2020-09-24T13:18:49-08:00
Duration: 1 min 53 s
Channel: Lourence Gonhovi
Description: In the New Testament, Jesus commends a widow who contributed 2 mites to the temple treasury (Mark 12: 42–44). A mite was worth roughly of a cent. Suppose the temple invested those 2 mites at 4% interest compounded quarterly. How much would the money be worth 2000 years later?

In the New Testament, Jesus commends a widow who contributed 2 mites to the temple treasury (Mark 12: 42–44). A mite was worth roughly of a cent. Suppose the temple invested those 2 mites at 4% interest compounded quarterly. How much would the money be worth 2000 years later?

Labs

Want to see this concept in action?

NEW

Explore this concept interactively to see how it behaves as you change inputs.

View Labs

Key Concepts

Exponential Growth

Exponential growth describes a process where a quantity increases at a rate proportional to its current value. In the context of compound interest, this means that even small initial investments can grow significantly over very long time periods due to the continuous accumulation of interest.

Time Value of Money

The time value of money is a core financial concept which holds that a specific amount of money has a different value at different points in time because of its potential earning capacity. This concept justifies why interest is accrued over time and is fundamental to the calculation of future investment value.

Compound Interest

Compound interest is the method of calculating interest whereby the interest earned is added to the principal, so that in subsequent periods, interest is earned on the increased balance. This principle is used to model how investments or loans grow over time when interest is reinvested, leading to exponential growth rather than linear growth.

Compounding Frequency

Compounding frequency refers to the number of times per year that interest is added to the principal balance. For example, quarterly compounding means interest is compounded four times a year, which affects not only the effective annual rate but also the overall growth of the investment over extended periods.

Transcript

Please give Ace some feedback