Maths question about Finance
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Maths question about Finance

[From: ] [author: ] [Date: 11-04-29] [Hit: ]
04)^3 -1000=1124.864 - 1000 = $124.86..........
Determine the interest paid on $1000 invested at 4% per annum compound interest for 3 years, with the interest compounded:
a) annually
b)every six months
c) monthly

Please show working out for each, thankyou :)

-
Interest = P(1+i)^n -P
a) Here P=$1,000
i = 0.04
n = 3
interest = 1000(1+0.04)^3 -1000
= 1000(1.04)^3 -1000
=1124.864 - 1000
= $124.86.......................Ans
b) Here P=$1,000
i = 0.04/2 = 0.02
n = 3*2 = 6
interest = 1000(1+0.02)^6 -1000
= 1000(1.02)^6 -1000
=1126.162419264 - 1000
= $126.16.......................Ans
c) Here P=$1,000
i = 0.04/12 = 0.00333333333333
n = 3*12 = 36
interest = 1000(1+0.0033333333333)^36 -1000
= 1000(1.0033333333333)^6 -1000
=1127.271874517776486- 1000
= $127.27 ......................Ans

-
A = P(1 + (r/n))^(nt)

I = A - P

A = 1000(1 + .04)^3
A = 1124.864
1124.86 - 1000 = $124.86

A = 1000(1 + (.04/2))^(2*3)
A = 1126.162419264
1126.16 - 1000 = $126.16

A = 1000(1 + (.04/12))^(12*3)
A = 1127.2718745179113092156571501262
1127.27 - 1000 = $127.27
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