Sharp CS-2870 Bedienungsanleitung PDF herunterladen (Seite 25)

COMPOUND INTEREST

Calculate the new balance on a deposit which is compounded quarterly for 4 years at

a given annual interest rate.

SOLUTION: 1. Calculate the quarterly interest rate.

2. Calculate the new balance (principal plus interest)

FORMULA: New balance = P (1 + i)"

Where P = amount of deposit (principal)

i = interest rate per period

n = number of years x 4

If P = $6,150

i = 5% annum -s- 4 periods = 0.0125

n = 4 years x 4 periods = 16

Then 6,150 (1 + 0.0125)^® = $7,502.32 (New Balance)

EXAMPLE:

(1)

(2) (3)

(4)

.05 0 0.05 0 05 ^

4 a

4' =

0.0125 0 0125 *

0.0125 00125 +

1 a

1.0125

1- +

1-0125 0

1.0125 1-0125 X

[i]

1-0125 ^

1.02515625 1-02515625 *

1.02515625 1-02515625 X

1-02515625 =

1.05094533691

1-05094533691 *

1.05094533691

1-05094533691 x

1-05094533691 =

1.10448610117 1-10448610117 =♦=

1.10448610117

1-10448610117 X

1-10448610117 =

1.21988954767 1-21988954767 >1'

1.21988954767 1-21988954767 x

6150 [±] 6.150- =

7,502.32071817 7.502-32071817 *■

— F

— 6

— 5

— 4

— 2

— 1

— 0

Annual int. rate

Quarterly int. rate

(1 +i)

(1+i)^

(1 + i)^

(1 +i)B

(1 +i)’

Principal

New balance

1 2 ... 20 21 22 23 24 25 26 27

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