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compound interest

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compound interest

by Suyog » Mon Nov 26, 2007 9:49 pm
How much interset will 2400 earn at an annual rate of 8% in 1 year if the interset is compounded every 4 months?
1. $141
2. $150
3. $197
4. $234
5. $312
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by syv11 » Mon Nov 26, 2007 10:35 pm
2400*[[1+(8%/3)]^4-1]=234
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by Suyog » Mon Nov 26, 2007 10:43 pm
No...ans is 197...
i got my mistake...was missing one term in the formula

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

P = principal amount (the initial amount you borrow or deposit)
r = annual rate of interest (as a decimal)
t = number of years the amount is deposited or borrowed for.
A = amount of money accumulated after n years, including interest.
n = number of times the interest is compounded per year

A = 2400 ( 1 + 8/300)^3
= 2597

So 2597 - 2400 = 197
Thanks neways!
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by syv11 » Mon Nov 26, 2007 10:51 pm
Stupid mistake from my side. Sorry.
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by mchen01 » Tue Nov 27, 2007 3:08 pm
What's the quickest way to calculate this:

A = 2400 ( 1 + 8/300)^3

Thanks!
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