What is down the line of beauty, just underneath φ? It is, of course, e! By e! I don’t mean e factorial, but just e. e is a number of some confusing sort. e can be represented as:

e=lim x->infinity (1+1/x)^x

AAAAAAAAAAAAAAAAAAAAAAAAAAAA! Not to worry, it’s not as disgusting as it looks. Imagine it this way: you borrowed $100 from the author, and you have it for 1 year, and give it at the end of the year with 100% interest. You will give me 100(1+1) = $200 back.

Now imagine you paid quarterly for the year, with 25% interest. In the first quarter, that is $125, Halfway is $156.25, and at the end of the year, you have to pay me a tiny bit more that $244.14!!!!!

Tenthly (every 1.2 months) payment is a tiny bit more than $259.37. Now this is the crazy bit. You pay me every DAY, and I end up with more than $271.45. Phew! What if you paid me ALL THE TIME NON-STOP?!?! Then you will give me a little more than $271.82, or $100e!

That will give me $171.82 more than what I had before. Yeees, I’M RICH!!!!!! I AM SO TOTALLY THE RICHEST PERSON IN THE WORLD!!!!!!

Says you.

Money critic

Yes, THANK YOU! e isn’t just used in financial maths, but also in other stuff. Stick around …

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.