On 23-Oct-08 21:23, Orchid XP v8 wrote:
> andrel wrote:
>> On 23-Oct-08 17:58, Invisible wrote:
>>> If something earns 10% compound interest in a year, how much interest 
>>> does it earn in half a year?
>>>
>>> (Now if it were *simple interest*, it would be 5%. But I don't how 
>>> what it is for compound interest...)
>>
>> Isn't this why logarithms were invented?
> 
> Probably. But I don't know how to correctly apply them in this case...
> 
interest is an exponential function. Taking a logarithm makes it linear.
after one year you have 10% interest, so in total 1.1 times your 
starting point. After a half year you will have

exp( (log(1.1)-log(1)) / 2) or 1.0488 times as much.

I admit that simply taking the square root of 1.1 would have been 
simpler, but this formula also works for 4 months. (Ok, that is 
effectively a cubic root. Let's say that it also works for 100 days ;) ).

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