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( 1 2 ) 10 = 1 1 , 024 ( 1 2 ) 20 = 1 1 , 048 , 576 ( 1 2 ) 30 = 1 1 , 073 , 741 , 824

As n gets very large, r n gets very small. We say that, as n increases without bound, r n approaches 0. As r n approaches 0, 1 r n approaches 1. When this happens, the numerator approaches a 1 . This give us a formula for the sum of an infinite geometric series.

Formula for the sum of an infinite geometric series

The formula for the sum of an infinite geometric series with −1 < r < 1 is

S = a 1 1 r

Given an infinite geometric series, find its sum.

  1. Identify a 1 and r .
  2. Confirm that 1 < r < 1.
  3. Substitute values for a 1 and r into the formula, S = a 1 1 r .
  4. Simplify to find S .

Finding the sum of an infinite geometric series

Find the sum, if it exists, for the following:

  1. 10 + 9 + 8 + 7 +
  2. 248.6 + 99.44 + 39.776 +  
  3. k = 1 4 , 374 ( 1 3 ) k 1
  4. k = 1 1 9 ( 4 3 ) k
  1. There is not a constant ratio; the series is not geometric.
  2. There is a constant ratio; the series is geometric. a 1 = 248.6 and r = 99.44 248.6 = 0.4 , so the sum exists. Substitute a 1 = 248.6 and r = 0.4 into the formula and simplify to find the sum:

    S = a 1 1 r S = 248.6 1 0.4 = 414. 3 ¯
  3. The formula is exponential, so the series is geometric with r = 1 3 . Find a 1 by substituting k = 1 into the given explicit formula:

    a 1 = 4 , 374 ( 1 3 ) 1 1 = 4 , 374

    Substitute a 1 = 4 , 374 and r = 1 3 into the formula, and simplify to find the sum:

    S = a 1 1 r S = 4 , 374 1 ( 1 3 ) = 3 , 280.5
  4. The formula is exponential, so the series is geometric, but r > 1. The sum does not exist.
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Finding an equivalent fraction for a repeating decimal

Find an equivalent fraction for the repeating decimal 0. 3 ¯

We notice the repeating decimal 0. 3 ¯ = 0.333... so we can rewrite the repeating decimal as a sum of terms.

0. 3 ¯ = 0.3 + 0.03 + 0.003 + ...

Looking for a pattern, we rewrite the sum, noticing that we see the first term multiplied to 0.1 in the second term, and the second term multiplied to 0.1 in the third term.

...

Notice the pattern; we multiply each consecutive term by a common ratio of 0.1 starting with the first term of 0.3. So, substituting into our formula for an infinite geometric sum, we have

S n = a 1 1 r = 0.3 1 0.1 = 0.3 0.9 = 1 3 .
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Find the sum, if it exists.

k = 1 0.76 k + 1

The series is not geometric.

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k = 1 ( 3 8 ) k

3 11

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Solving annuity problems

At the beginning of the section, we looked at a problem in which a couple invested a set amount of money each month into a college fund for six years. An annuity    is an investment in which the purchaser makes a sequence of periodic, equal payments. To find the amount of an annuity, we need to find the sum of all the payments and the interest earned. In the example, the couple invests $50 each month. This is the value of the initial deposit. The account paid 6% annual interest , compounded monthly. To find the interest rate per payment period, we need to divide the 6% annual percentage interest (APR) rate by 12. So the monthly interest rate is 0.5%. We can multiply the amount in the account each month by 100.5% to find the value of the account after interest has been added.

We can find the value of the annuity right after the last deposit by using a geometric series with a 1 = 50 and r = 100.5 % = 1.005. After the first deposit, the value of the annuity will be $50. Let us see if we can determine the amount in the college fund and the interest earned.

Questions & Answers

Ayele, K., 2003. Introductory Economics, 3rd ed., Addis Ababa.
Widad Reply
can you send the book attached ?
Ariel
?
Ariel
What is economics
Widad Reply
the study of how humans make choices under conditions of scarcity
AI-Robot
U(x,y) = (x×y)1/2 find mu of x for y
Desalegn Reply
U(x,y) = (x×y)1/2 find mu of x for y
Desalegn
what is ecnomics
Jan Reply
this is the study of how the society manages it's scarce resources
Belonwu
what is macroeconomic
John Reply
macroeconomic is the branch of economics which studies actions, scale, activities and behaviour of the aggregate economy as a whole.
husaini
etc
husaini
difference between firm and industry
husaini Reply
what's the difference between a firm and an industry
Abdul
firm is the unit which transform inputs to output where as industry contain combination of firms with similar production 😅😅
Abdulraufu
Suppose the demand function that a firm faces shifted from Qd  120 3P to Qd  90  3P and the supply function has shifted from QS  20  2P to QS 10  2P . a) Find the effect of this change on price and quantity. b) Which of the changes in demand and supply is higher?
Toofiq Reply
explain standard reason why economic is a science
innocent Reply
factors influencing supply
Petrus Reply
what is economic.
Milan Reply
scares means__________________ends resources. unlimited
Jan
economics is a science that studies human behaviour as a relationship b/w ends and scares means which have alternative uses
Jan
calculate the profit maximizing for demand and supply
Zarshad Reply
Why qualify 28 supplies
Milan
what are explicit costs
Nomsa Reply
out-of-pocket costs for a firm, for example, payments for wages and salaries, rent, or materials
AI-Robot
concepts of supply in microeconomics
David Reply
economic overview notes
Amahle Reply
identify a demand and a supply curve
Salome Reply
i don't know
Parul
there's a difference
Aryan
Demand curve shows that how supply and others conditions affect on demand of a particular thing and what percent demand increase whith increase of supply of goods
Israr
Hi Sir please how do u calculate Cross elastic demand and income elastic demand?
Abari
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Source:  OpenStax, Precalculus. OpenStax CNX. Jan 19, 2016 Download for free at https://legacy.cnx.org/content/col11667/1.6
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