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#1 2019-04-13 16:44:26

yorkmanz
Member
Registered: 2019-01-12
Posts: 11

compound interest

hello


please i need help understanding both questions



use the compound interest formula a= p(1+i)^n to answer the following questions:



1:) what type of equation is present if n is constant equal to 1, rather than a variable?


2:) what type of equation is present if i, A, or P are constant rather than  variable?




thanks

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#2 2019-04-13 17:52:10

ganesh
Administrator
Registered: 2005-06-28
Posts: 27,325

Re: compound interest

Hi,

The compound interest formula:

or

where A is the Amount, P is the Principal, r or i is rate of interest per period (e.g. per month, per quarter, per annum etc.).

1.) When i increases, and n also increases, A and P increase. When i decreases n also decreases, A and P decrease.

when i increases and n decreases, or vice versa, the change is caused dependent on the values.

2). Amount and Principal is dependent on i, as well as n.


It is no good to try to stop knowledge from going forward. Ignorance is never better than knowledge - Enrico Fermi. 

Nothing is better than reading and gaining more and more knowledge - Stephen William Hawking.

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#3 2019-04-14 09:48:22

yorkmanz
Member
Registered: 2019-01-12
Posts: 11

Re: compound interest

ganesh wrote:

Hi,

The compound interest formula:

or

where A is the Amount, P is the Principal, r or i is rate of interest per period (e.g. per month, per quarter, per annum etc.).

1.) When i increases, and n also increases, A and P increase. When i decreases n also decreases, A and P decrease.

when i increases and n decreases, or vice versa, the change is caused dependent on the values.

2). Amount and Principal is dependent on i, as well as n.



thanks for replying...


for 1:) since n is constant i think its just  Simple interest and principle

if

n = 1

=A = P(1+i)^n =

=P(1+i)^1

= P(1+i)


now we know that i = r/n

since r n=1,

i = r = interest rate

then we have A = P + P*i

i think its just  Simple interest and principle and we have

now the This is  a linear equation.


for 2:) TRICKY

if  i is a constant, this is an exponential equation  `a=b^n` where `b=P(1+i)` , `b` a constant. if (In this case, P is a parameter)

and so on for a, b


please correct me if i am wrong

thanks

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#4 2019-04-14 12:18:59

ganesh
Administrator
Registered: 2005-06-28
Posts: 27,325

Re: compound interest

Hi yorkmanz,

Your reply (both parts) is correct.


It is no good to try to stop knowledge from going forward. Ignorance is never better than knowledge - Enrico Fermi. 

Nothing is better than reading and gaining more and more knowledge - Stephen William Hawking.

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