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Thanks John,
In hindsight I realize that shabby mistake on my part.
This is my attempt at simplification below.
=
The revision handbook gives
as the correct answer though. What am I doing incorrectly at ?Hi Bobb;
Got it, thanks. I did not divide the given interest rate by the number of compounding periods per year. It seems I failed to apply the very thing lacking from the first question, to the second.
Hi Bob,
Thanks for your polite correspondence and reassurance. I tend to second-guess myself when my calculations are (seemingly) off.
I'm South African. The link below says it all:
http://www.bdlive.co.za/national/education/2013/10/20/standard-of-maths-teaching-in-sa-at-rock-bottom-report-shows
Ian
I have problem with two calculations of compound interest, as per my prescribed textbooks, which I find confusing:
1.
Q: Sam borrowed R10 000 at 7,5% per year compounded monthly. Determine the amount that Sam owes after 3 years.
A: S = P(1+i)n
= 10000(1+7,5%)3
= 10000(1+0,075)3
= 12422,97
*Above, i and n have not been compounded monthly. My calculation is as follows:
S = P(1+i)n
= 10000(1+7,5%/12)3x12
= 10000(1+0,075/12)3x12
= 12514.46
2.
Q: Jill invested R10 000 into an account earning 9,2% interest, compounded quarterly. If she received R24 832,78 determine the periods under consideration.
A: S = P(1+i)n
24832,78 = 10000(1+ 9,2%/4)n
n = 40/10
= 10 years
* This answer above is copied verbatim, no additional steps of calculation have been included in the prescribed textbook. My calculation, as per your formula provided on the website, is as follows:
n = In(24832.78/10000)/In(1+0.092)
= 10.33
When I do the calculations backwards by replacing n with 10 and 10.33 respectively my answers are also incongruent:
10: S=24832.78
10.33: S = 25589.46
Am I making basic errors or is the textbook wrong?
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