equation of the form $$ y=14,000(1.06)^{x} $$ provides an example of interest compounded annually. This means that the full $$ 6 \% $$ of count at the end of one year. This doesn't sound very fair to someone that invests their money for 11 months-they get no intere mpetitive disadvantage for financial institutions, and some began to divide the annual interest into periodic shares, so that (for that $$ 6 \% $$ each month. When this happens, we say that interest is compounded monthly. Interest can also be compounded weekl warterly ( 4 times per year), daily ( 365 times per year), or really any other period you could think of. interest is compounded monthly, what growth factor would be needed to provide $$ 1 / 12^{ ext {th }} $$ of $$ 6 \% $$ interest each month? (Think about Therest rate and growth factor.)

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equation of the form $$ y=14,000(1.06)^{x} $$ provides an example of interest compounded annually. This means that the full $$ 6 \% $$ of count at the end of one year. This doesn't sound very fair to someone that invests their money for 11 months-they get no intere mpetitive disadvantage for financial institutions, and some began to divide the annual interest into periodic shares, so that (for that $$ 6 \% $$ each month. When this happens, we say that interest is compounded monthly. Interest can also be compounded weekl warterly ( 4 times per year), daily ( 365 times per year), or really any other period you could think of. interest is compounded monthly, what growth factor would be needed to provide $$ 1 / 12^{	ext {th }} $$ of $$ 6 \% $$ interest each month? (Think about Therest rate and growth factor.)

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The growth factor needed for monthly compounding of a $$6\%$$ annual interest rate is $$1.005$$.

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