Course Content
R Introduction: Part I
1. Basic Syntax and Operations
R Introduction: Part I
Exponentiation
Exponentiation is another fundamental mathematical operation, which is readily available in R's base functionality.
In the context of finance, this operation plays a critical role in the computation of compound interest, which is pivotal for understanding the growth of loans or investments over time.
To exponentiate a number a
to the power of n
in R, the syntax is a^n
. Interestingly, if you're familiar with Python, you might recognize the **
operator, which can also be used in R (a**n
). Let’s take an example related to probability and combinatorics: to find out the number of possible outcomes when throwing three dice. In this case, we would calculate it as 6 (the number of outcomes for one die) raised to the power of 3.
Task
Let’s say you invested $1000 at an annual interest rate of 13%. To calculate the total amount of money you would accumulate over a period of 4 years with compound interest, you would perform the following calculation:
Compute the product of 1000
and 1.13
raised to the power of 4
.
Everything was clear?