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#1 2013-02-19 08:40:47

vatso
Member
Registered: 2013-02-19
Posts: 5

Time Value of Money

1) What is the accumulated value of $150 invested for three years and three months when the rate of interest is 0.5% per month? The right answer is $182.21. How to you get to that figure?

2) $100 invested for two years at an interest rate of 2% per quarter. What is the difference between the compound and simple interest earned on this investment? The correct answer is $1.17. How you get this value?

3) What is the future value of £100 invested at 1% per month for five years? The correct answer is $181.67. How do you get that value?
Again, thank you in advance!!!!

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#2 2013-02-19 15:12:02

bobbym
Administrator
From: Bumpkinland
Registered: 2009-04-12
Posts: 85,315

Re: Time Value of Money

Hi vatso;

Simplest way is to form the recurrence

with a(0) = 150. Then you just run the recurrence forward for 39 months. Answer is 182.20809 which when rounded is 182.21

From the recurrence you can also get a formula:


Question 3) is done the same way.

Last edited by bobbym (2013-02-19 15:34:31)


In mathematics, you don't understand things. You just get used to them.
Of course that result can be rigorously obtained, but who cares?
Combinatorics is Algebra and Algebra is Combinatorics.

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#3 2013-02-20 01:38:59

vatso
Member
Registered: 2013-02-19
Posts: 5

Re: Time Value of Money

Thank you Bobbym!!!!!! Really appreciated it!!!

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#4 2013-02-20 01:53:19

bobbym
Administrator
From: Bumpkinland
Registered: 2009-04-12
Posts: 85,315

Re: Time Value of Money

Hi vatso;

You are welcome and welcome to the forum.


In mathematics, you don't understand things. You just get used to them.
Of course that result can be rigorously obtained, but who cares?
Combinatorics is Algebra and Algebra is Combinatorics.

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