Series & Sequences (Financial derivatives) question (1 Viewer)

pomsky · Oct 20, 2015

Hey guys,
I never really understood this- but is interest always taken into account last? Or if the question stipulates that they withdrew/deposited money at the end of the month- does this mean that they deposited/ withdrew money after interest?

adflkjsa

http://imgur.com/dNHJI6k

InteGrand · Oct 20, 2015

pomsky said:
Hey guys,
I never really understood this- but is interest always taken into account last? Or if the question stipulates that they withdrew/deposited money at the end of the month- does this mean that they deposited/ withdrew money after interest?

adflkjsa

http://imgur.com/dNHJI6k

$If they withdraw at the end of the month, the interest accumulates first, and \emph{then} the withdrawal happens. In other words, if $r$ is the per-period interest rate, $A_n$ is the amount in the account at the \textsl{end} of period $n$ ($n=0,1,2,\ldots$), and $W$ is the amount withdrawn per period, then $A_{n+1}=A_n (1+r)-W$. That is, the amount remaining in the $(n+1)^{\text{th}}$ period is computed by increasing the previous period's amount by the interest earned on it, and \textsl{then} decreasing it by the amount withdrawn.$

InteGrand · Oct 20, 2015

Series & Sequences (Financial derivatives) question (1 Viewer)

pomsky

Active Member

InteGrand

Well-Known Member

InteGrand

Well-Known Member

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