mathematics for Economists M1 2021/22: lab session 6 pmaraner@unibz.

it

sequences
approximations and sequences
p
Exercise 87. Since 2 is between the squares 1 = 12 and 4 = 22 , 2 is between 1
1+2 3
and 2. Since the average of these numbers = = 1.5 has square greater than
p 2 2
2, 2 is between 1 and 1.5. Since the average of these numbers 1+1.5 = 1.25 has
p 2
square less than 2, 2 is between 1.25 and 1.5, etc. By proceeding in this way is
it possible to construct
p two sequences of numbers (one always lesspthan, the other
p
always greater than 2) whose values get closer and closer to 2. Round 2
to the fourth decimal
p place. How many iterations are needed? Apply the same
method to round 3 to the fourth decimal place.
p p
solution: 2 ⇡ 1.4142 with 14 iterations; 3 ⇡ 1.7321 with 21 iterations.

Exercise 88. Given the first elements of the sequence s = {(n, sn ) | n 2 N} identify
the explicit form of sn .

1. (0, 0), (1, 2), (2, 4), (3, 6), ... Sn -2h

2. (0, 1), (1, 3), (2, 5), (3, 7), ... Su -24+1

3. (0, 2), (1, 6), (2, 10), (3, 14), ...Su -44+2
" +1

4. (0, 3), (1, 9), (2, 27), (3, 81), ...Su =3

"
5. (0, 3), (1, 6), (2, 12), (3, 24), ...Su =3 -2

6. (0, 1), (1, 1), (2, 12 ), (3, 16 ), (4, 24

1
), ...su
=L
7. (0, 0), (1, 1), (2, 2), (3, 3), ...Sn =L 1) "
.

h
-

solutions: 1. sn = 2n 2. sn = 2n + 1 3. sn = 4n + 2 4. sn = 3n+1 5. sn = 3 · 2n 1
6. sn = n! 7. sn = ( 1)n n.

limit of a sequence

Exercise 89. Indicate the distance between the two given points on the real line
(the length of the line segment connecting them).
1×-21 1×-41
1. 3 and 1 2. 5 and 1 3. x and 2 4. x and y
13-11=2 15 ( 1) 1=6 -
-

with x and y any two real numbers.

solutions: 1. 3 1 = 2 2. 5 ( 1) = 6 3. x 2 if x 2, 2 x if x < 2 or |x 2| 4. |x y|

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Exercise 90. Given the sequence sn = n1 , with n > 0, find n✏ such that the distance
between sn and 0 is less than
1 1 1
1. 10
2. 100
3. 10000
4. any small real number ✏
1
for all n > n✏ . What is the limit lim ?
n!1 n
2n + 1
solutions: 1. n✏ = 10 2. n✏ = 100 3. n✏ = 10000 4. n✏ = 1
✏
; lim = 0.
n!1 n

2n+1
Exercise 91. Given the sequence sn = n
, with n > 0, find n✏ such that the
distance between sn and 2 is less than
1 1 1
1. 10
2. 100
3. 10000
4. any small real number ✏
2n + 1
for all n > n✏ . What is the limit lim ?
n!1 n 2n + 1
solutions: 1. n✏ = 10 2. n✏ = 100 3. n✏ = 10000 4. n✏ = 1
✏
; lim = 2.
n!1 n

2n2 +1
Exercise 92. Given the sequence sn = n2
, with n > 0, find n✏ such that the
distance between sn and 2 is less than
1 1 1
1. 10
2. 100
3. 10000
4. any small real number ✏

2n2 + 1
for all n > n✏ . What is the limit lim ?
n!1 n2
2n2 + 1
solutions: 1. n✏ = 4 2. n✏ = 10 3. n✏ = 100 4. n✏ = p1 ; lim =2
✏ n!1 n2

Exercise 93. Given the sequence sn = n + 1, find n✏ such that sn is larger than

1. 10 2. 100 3. 10000 4. any large integer number N

for all n > n✏ . What is the limit lim n + 1?

n!1
solutions: 1. n✏ = 9 2. n✏ = 99 3. n✏ = 9999 4. n✏ = N 1; lim n + 1 does not exist ad n + 1 ! 1 as n ! 1.
n!1

Exercise 94. Given the sequence sn = n2 + 1, find n✏ such that sn is larger than

1. 10 2. 100 3. 10000 4. any large integer number N

for all n > n✏ . What is the limit lim n2 + 1?
n!1 p 2
solutions: 1. n✏ = 3 2. n✏ = 10 3. n✏ = 100 4. n✏ equal to the integer part of N 1; lim n + 1 does not exist ad
n!1
2
n + 1 ! 1 as n ! 1.

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interests rates and compounding

Exercise 95. Suppose a principal S0 yields interest at the annual (or nominal)
rate of p%. Evaluate the amount it will have increase after n years if the interest
is compounded
1. yearly,
2. m times a year,
Explain.
p
solutions: 1. After one year the principal S0 will have increase to S1 = S0 + S0 r = S0 (1 + r) with r = . After two years it
100
will have increase to S2 = S0 (1 + r) + S0 (1 + r)r = S0 (1 + r) , after three years toS3 = S0 (1 + r) + S0 (1 + r) r = S0 (1 + r)3 and
2 2 2

1 p
after n years to Sn = S0 (1 + r)t . 2. The interest payed in an interest period of year amounts to %. After one period
✓ ◆ m m
r p
the principal S0 will have increase to S 1 S0 1 + , again with r = . After m periods, a year, S0 will have increase to
✓ ◆ m m ✓ ◆100
r m r mn
S1 = S0 1 + and after mn periods, n years, to Sn = S0 1 + .
m m

Exercise 96. What will be the size of an account after three years if a principal
of 1 000 e is invested at a nominal interest rate of 5% compounded

1. annually? 2. monthly? 3. daily?

solutions: 1. 1 157.63 e 2. 1 161.47 e 3. 1 161.82 e

Exercise 97. A sum of 1 500 e is invested for 5 years. What annual interest rate
must be paid for the deposit to increase by 30%?
q
solutions: r = 5 195
150
1 ⇡ 5.4%

Exercise 98. A sum of 1 500 e is invested at the annual interest rate of 2.5%.
After how many years the capital has increased by 20%?
solutions: n = log1.025 18
15
years ⇡ 7, 4 years

Exercise 99. By means of a computer, evaluate to the fourth decimal place the
limit of the sequences
✓ ◆n ✓ ◆ 100n
1 7 7
1. sn = 1 + 2. sn = 1+
n 100n
What value of n must be reached for the fourth decimal place to stabilize (i.e. so
that the distance of the elements of the sequence from the limit is less than 10 4 )?
solutions: 1. e ⇡ 2.7182, n ⇡ 100 000 2. e ⇡ 2.7182, n ⇡ 10 000.

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Exercise 100. A principal S0 yields interest at the annual rate of p% compounded
m times a year. Evaluate the amount it will have increase after n years if m is a
very large number (the limit m ! 1 is dubbed continuous compounding).
m p
solutions: Continuous compounding amounts to compound m times a year with m, equivalently (r = ), growing to infinity.
2 r 100
✓ ◆mn ! m rn ! m 3rn ✓ ◆
r 1 r 1 r 1 x
Rewrite Sn = S0 1 + as S0 1 + m = S0 4 1 + m 5 and recall that lim 1+ = e. In the limit
m x!1 x
r r
rn
m ! 1 we obtain that after n years the principal S0 will have increase to Sn = S0 e .

Exercise 101. What will be the size of an account after three years if a principal
of 1 000 e is invested at a nominal interest rate of 5% compounded continously?
solution: 1 161.83 e

Exercise 102. A sum of 2 000 e is invested for 4 years. What annual interest rate
compounded continuously must be paid for the deposit to increase by 20%?
solutions: r = 1
4
ln 6
5
⇡ 4.5%

Exercise 103. A sum of 2 000 e is invested at the annual interest rate of 2%

compounded continuously. After how many years the capital has increased by
15%?
1 ln 23 ⇡ 7 years
solutions: n = 0.02 20

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