Compound Interest

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Compound Interest

Postby William » Tue Apr 23, 2013 4:16 am

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
 
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Joined: Mon Jan 28, 2013 8:07 pm

Re: Compound Interest

Postby nicole » Tue Apr 23, 2013 4:23 am

IB Mathematical Studies, Compound Interest, time period

The general compounding formula is:


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

Therefore
(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
 
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Re: Compound Interest

Postby William » Tue Apr 23, 2013 4:28 am

Thanks Nicole!
William
 
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Joined: Mon Jan 28, 2013 8:07 pm


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