Math, Better Explained by Azad Kalid

Author:Azad, Kalid [Azad, Kalid]
Language: eng
Format: mobi, epub
Tags: Math
Publisher: Kalid Azad

Because our rate is 50% per half year, that 50 cents would have earned 25 cents (50% times 50 cents). At the end of 1 year we’d have

Our original dollar (Mr. Blue)

The dollar Mr. Blue made (Mr. Green)

The 25 cents Mr. Green made (Mr. Red)

Giving us a total of $2.25. We gained $1.25 from our initial dollar, even better than doubling!

Let’s turn our return into a formula. The growth of two half-periods of 50% is:

growth = (1 + 100%/2)2 = 2.25

7.5 Diving Into Compound Growth

It’s time to step it up a notch. Instead of splitting growth into two periods of 50% increase, let’s split it into 3 segments of 33% growth. Who says we have to wait for 6 months before we start getting interest? Let’s get more granular in our counting.

Charting our growth for 3 compounded periods gives a funny picture:

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