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#1 2005-12-05 11:07:07

Nestea
Member
Registered: 2005-11-12
Posts: 9

Compound Interest

Oleg borrowed $4,500, $4,000, $4,500, and $4,000 from his dad on September 1 of each of four successive years for college expenses. Oleg and his dad agreed to a loan at the rate of 7% compounded quarterly. If it is now 1 year from the last day that he borrowed money, how much would Oleg owe?
For full marks your answer should be rounded to the nearest cent.

Could someone please help me on this one? The answer is 20 322.85. Just to check if it's right.

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#2 2005-12-05 11:37:30

Ricky
Moderator
Registered: 2005-12-04
Posts: 3,791

Re: Compound Interest

Could you post your work as well?


"In the real world, this would be a problem.  But in mathematics, we can just define a place where this problem doesn't exist.  So we'll go ahead and do that now..."

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#3 2005-12-05 11:42:45

Nestea
Member
Registered: 2005-11-12
Posts: 9

Re: Compound Interest

FV = PV(1 + i/4)4×n thats the formula I use. I can never get it right.

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#4 2005-12-05 11:52:13

Nestea
Member
Registered: 2005-11-12
Posts: 9

Re: Compound Interest

I just need the n and im good. N = m (term)
N= Total number of compoundings
m = number of compounding per year

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#5 2005-12-05 14:59:58

irspow
Member
Registered: 2005-11-24
Posts: 1,055

Re: Compound Interest

FV = PV(1 + i%)^(t)  .... t would equal 4y in this case ... y as in years.

4500(1.07)^16 = 13284.73687
4000(1.07)^12 = 9008.766356
4500(1.07)^8  =  7731.837809
4000(1.07)^4  =  5243.18404

Oleg owes 35268.53

That is why no one should take a loan that is compounded quarterly!


I am at an age where I have forgotten more than I remember, but I still pretend to know it all.

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#6 2008-08-25 07:18:14

Ms. Bitters
Member
Registered: 2008-07-31
Posts: 19

Re: Compound Interest

Nestea wrote:

Oleg borrowed $4,500, $4,000, $4,500, and $4,000 from his dad on September 1 of each of four successive years for college expenses. Oleg and his dad agreed to a loan at the rate of 7% compounded quarterly. If it is now 1 year from the last day that he borrowed money, how much would Oleg owe?
For full marks your answer should be rounded to the nearest cent.

Could someone please help me on this one? The answer is 20 322.85. Just to check if it's right.


I know of a place Where you never get harmed
A magical place With magical charms
Indoors! Indoors! Iiinnndoooooooooooorrrrs!

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