Continuously Compounded Interest and Diving.

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In summary, the intensity L(x) of light at x feet beneath the surface of the ocean satisfies the differential equation: L(x)= Ce-kx. This equation contains two unknown constants, C and k, and is equivalent to e-k= (1/2)1/18.
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niyati
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The intensity L(x) of ligh X feet beneath the surface of the ocean satisfies the differential equation:

dL/dx = -kL

As a diver, you know from experience that diving to 18 ft in the Caribbean Sea cuts the intensity in half. You cannot work without artificial light when the intensity falls below one-tenth of the surface value. About how deep can you expect to work without artificial light? We are learning compound interest and whatnot. So, the equation we manipulate is:

A = Ao(e^(rt))

A is probably a tenth of (-kL), which is the original surface value of the ocea. I somehow should use the ratio of 18ft cutting the intensity in half, but I'm not sure how.

o_O
 
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  • #2
I was wondering what in the world "compound interest" had to do with "diving". I thought perhaps you had to take out a loan to pay for your diving equipment!

Yes, the "differential equation" dL/dx= -kL has solution L(x)= Ce-kx as you can see by differentiating that. That, of course, contains two unknow constants, C and k. If you've done "compound interest" problems that are similar, you probably know you can find C by looking at the "initial valule". Here, L(0)= Ce0= C and, since x is "depth", is the amount of light at the surface. You also know " diving to 18 ft in the Caribbean Sea cuts the intensity in half. " Okay, measuring x in feet, you now know that L(18)= Ce-18k= C/2. The C's cancel and you have e-18k= 1/2. You can solve that for k by taking logarithms: -18k= ln(1/2)= -ln(2) so k= ln(2)/18.
Now L(x)= Ce-ln(2)x/18. You are told "cannot work without artificial light when the intensity falls below one-tenth of the surface value. " That is, when L(x)= C/10.
Solve L(x)= Ce-ln(2)x/18= C/10 for x.

By the way, while e is convenient for derivatives, all exponentials are equivalent. From e-18k= 1/2, you can calculate that (e-k)18= 1/2 or e-k= (1/2)1/18. You could rewrite L(x)= Ce-kt as L(x)= C(1/2)t/18 instead.
 
  • #3
Thank you!

:DDD
 

What is continuously compounded interest?

Continuously compounded interest is a method of calculating interest where the interest is added to the principal amount at every instance, resulting in a continuous growth of the investment.

How is continuously compounded interest different from regular interest?

In regular interest, the interest is only added to the principal amount at specific intervals, such as monthly or annually. Continuously compounded interest, on the other hand, is calculated and added constantly, resulting in a higher overall return on investment.

What is the formula for continuously compounded interest?

The formula for continuously compounded interest is A = Pe^(rt), where A is the final amount, P is the principal amount, e is Euler's number (approximately 2.71828), r is the interest rate, and t is the time in years.

How is continuously compounded interest used in finance?

Continuously compounded interest is commonly used in finance to calculate the growth of investments, such as stocks, bonds, and savings accounts. It is also used in the valuation of options and other financial derivatives.

What is the relationship between continuously compounded interest and the number e?

The number e is a mathematical constant that represents the limit of (1 + 1/n)^n as n approaches infinity. It is used in the formula for continuously compounded interest because it allows for the continuous growth of the investment, as opposed to discrete intervals in regular interest calculations.

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