Sharp cs-2850 Manuel d'utilisateur télécharger pdf (Page 29)

COMPOUND INTEREST

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

a given annual interest rate.

SOLUTION;

FORMULA:

EXAMPLE:

1. Calculate the quarterly interest rate.

2. Calculate the new balance (principal plus interest)

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 -r 4 periods = 0.0125

n = 4 years x 4 periods = 16

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

(1)

(2) (3)

(4)

.05 g]

0.05

0 05 -r

4 [1]

4 =

0.0125 a

0 0125 *

0.0125 a

0 0125 +

1.0125 a

1- +

1 0125 0

1.0125

10125 X

1-0125 =

1.02515625 a

1 02515625 *

1.02515625

1 02515625 X

1 02515625 =

1.05094533691 a

1 05094533691 *

1.05094533691

1 05094533691 X

1 05094533691 =

1.10448610117 a

1-10448610117 *

1.10448610117

1-10448610117 X

1-10448610117 =

1.21988954767 a

1-21988954767 *

1.21988954767

1-21988954767 x

6150 [S

6-150- =

7,502.32071817 a

7-502 32071817

Annual int. rate

Quarterly int. rate

(1 +i)

(1 + i)*

(1 + i)^

(1 + 0®

(1 + i)««

Principal

New balance

1 2 ... 24 25 26 27 28 29 30 31

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Sharp cs-2850 Manuel d'utilisateur Page 29

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