QR compound interest

[c3p]

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compound interest problems on top score are done a bit wierd....they solve individually

so why not use the: cost = principle(1+interest)^t

also, if it is done twice a year how do i go about this? or like if it is done monthly...

thanks, i have a feeling ill get screwed on these on my dat, even tho i shouldnt since it should be plug and chug once you figure out how many times/year interest is taken right?

 

[wantVCUdental]

Compounding can't get complicated on the DAT, because annuities can take a long time to figure out, however the compounding 2x/year is very possible and simple to solve
For example, you borrow Y amount from Bank of America, and you are charged 6% compounded 2x/year. How much will you owe in 4 years.
That's just
Y(1+0.06/2(compounding period))^4x2
or Y(1+0.03)^8
That's how i would approach it

 

[c3p]

Compounding can't get complicated on the DAT, because annuities can take a long time to figure out, however the compounding 2x/year is very possible and simple to solve
For example, you borrow Y amount from Bank of America, and you are charged 6% compounded 2x/year. How much will you owe in 4 years.
That's just
Y(1+0.06/2(compounding period))^4x2
or Y(1+0.03)^8
That's how i would approach it

thanks man....oh yea and VCU is a sick ass school.

 

[c3p]

what is the interest for the third year on an investment of $1000 if a 12% annual interest rate is compounded yearly?

why wouldnt it be: 1000(1+.12/1)^1*3 ?

ans is 153.53

 

[Streetwolf]

I'm getting 150.53.

The first year is 1000(1.12) = 1120
The second year is 1120(1.12) = 1254.40
The third year would have interest of 1254.40(0.12) = 150.53.

 

[c3p]

I'm getting 150.53.

The first year is 1000(1.12) = 1120
The second year is 1120(1.12) = 1254.40
The third year would have interest of 1254.40(0.12) = 150.53.

yea you are right. i am stupid i accidentally wrote 153.
anyway so you would do it this way on the real test? one year at a time?

 

[Streetwolf]

yea you are right. i am stupid i accidentally wrote 153.
anyway so you would do it this way on the real test? one year at a time?

If it asked for 28 years I wouldn't do that but I'd realize that I'd have to do (1.12) for the first 27 times and then 0.12 to get the interest during the 28th year.

So it would be 1000(1.12)^27(0.12) for that.