oldheaven wrote:Mr.Greed is going to be employed by a firm.they want to redact a biennial contract.the salary determined to be x.There are various suggestions about the Time and the Rate of increasing his salary.what term do you guess will be included in the contract?
1)20% each year
2)10% each half a year
3)5% each 3-month
4)(5/3)% each month
If I have a choice like that I will go with
option 4
you can take the analogy of compound interest principle and apply it here.
if you have 100$ and compounded it with 10% interest for an year it will yield 100(1+10/100) = 110 $
and if the same 100$ when compounded half yearly with 5% then it will yield 100(1+5/100)^2 = 100(1.05)^2 = 110.25. This means i will get a quarter more
So for the same annual interest rate, as the number of times you compound the principle increases, the more you will accumulate at the end of the term.
user123321
