Still trying to fake it CTD.
What you need to look at is converting ONE compounding period to another while keeping the
actual annual interest rate the same:
From your very own first reference:
http://en.wikipedia.org/wiki/Compound_interestTranslating different compounding periods:
B) You know the equivalent annual interest rate is 4%, but it will be compounded quarterly. You need to find the interest rate that will be applied each quarter.
{1+.04}^(1/4)-1 = .00985341
$100*(1+ .009853)*(1+ .009853)*(1+ .009853)*(1+ .009853) = $104
Now let's do it for monthly compounding for the same actual annual rate:
{1+.04}^(1/12)-1 = 0.003273739782198863859294320415879
$100*(1+ 0.00327374)*(1+ 0.00327374)*(1+ 0.00327374)*(1+ 0.00327374)*(1+ 0.00327374)*(1+ 0.00327374)*(1+ 0.00327374)*(1+ 0.00327374)*(1+ 0.00327374)*(1+ 0.00327374)*(1+ 0.00327374)*(1+ 0.00327374) = ...
(the envelope please) ... $104.00
This is how you
honestly compare interest rates to decay rates.
Still in denial?
Enjoy.
Added by edit:
You would also do well to look down the page to where it solves for "continuous compounding" - which would represent actual physical constant decay rates ...
