## Compound Interest

Number and algebra, Descriptive statistics, Logic, sets and probability, Statistical applications, Geometry and trigonometry, Mathematical models, Introduction to differential calculus.

### Compound Interest

IB Mathematics Studies, Financial Mathematics, Compound Interest

How can we calculate for how long the amount of $12,000 to be deposit into an account to collect$20,000 if the account is paying 5% per annum compounded quarterly?
Thanks
William

Posts: 0
Joined: Mon Jan 28, 2013 8:07 pm

### Re: Compound Interest

IB Mathematical Studies, Compound Interest, time period

The general compounding formula is:
$F=P \cdot (1+ \frac{r}{100})^n$

Where F is the future value of the investment (=$20,000), P the principal (=$12,000), r is the interest rate per compound period ($\frac{5}{4}$) and n is the number of compounding periods (unknown in our case).

Therefore
$20,000=12,000 \cdot (1+ \frac{5}{400})^n=> n=41.12$ (using solver or graph)
The answer is approximately 41 quarters.

The guidelines for doing this exercise directly to GDC Casio FX-9860 is
TVM -> F2: Compound Interest -> I%=5, PV=12000, FV=-20000, P/Y=4, C/Y=4 and then press n and get the same result (=41.12).

Hope these help!!
nicole

Posts: 0
Joined: Mon Jan 28, 2013 8:10 pm

### Re: Compound Interest

Thanks Nicole!
William

Posts: 0
Joined: Mon Jan 28, 2013 8:07 pm