Interest Rate Q (1 Viewer)

[Absolutezero]

I used to be able to do these, but over the course of the year out of school I've completely forgotten.

Q. $500 is placed into a bank account, which is compounded at 8% per month. Every two weeks, I put in $20. How much is it worth after a year?

 

[daryl-d]

mathsonline.com.au has a really good explanation of how to do these

 

[Michaelmoo]

Basically these questions involve a sumation of compound interest. Since our initial sum (500) is not the same as the regular deposits (20), so you consider them separately.

 

[Absolutezero]

Yeah... I'm just having trouble creating the right formula for it. I keep missing steps.

 

[addikaye03]

I used to be able to do these, but over the course of the year out of school I've completely forgotten.

Q. $500 is placed into a bank account, which is compounded at 8% per month. Every two weeks, I put in $20. How much is it worth after a year?

P=$500, I= ( question is misleading here, assuming its 8%p.a)=0.08/12, n=12

A_1=500+500(0.08/12)^12

A_2=500(1+0.08/12)^12+20(1+0.08/12)^10

A_3=500(1+0.08/12)^12+20(1+0.08/12)^10+20(1+0.08/12)^8

A_12=500(1+0.08/12)^12+20(1+0.08/12)+..+20(1+0.08)^2+20

A_12=500(1+0.08/12)^12+[(20(1+0.008/12)^24-1)/((1+0.08)^2-1]

I think thats right but i'm not 100% sure, haven't done these in ages and ages.

 

[Absolutezero]

Your probably right about p.a. I'm just going but the information I can remember being told... i was trying to work it out for a friend.

 

[addikaye03]

Your probably right about p.a. I'm just going but the information I can remember being told... i was trying to work it out for a friend.

yer, thats fine. 8% per month is ridiculously high, thats why i thought it would be p.a.