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## #1 2013-02-20 07:40:47

vatso
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### 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?

## #2 2013-02-20 14:12:02

bobbym

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### 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 (2013-02-20 14:34:31)

In mathematics, you don't understand things. You just get used to them.
I have the result, but I do not yet know how to get it.
All physicists, and a good many quite respectable mathematicians are contemptuous about proof.

## #3 2013-02-21 00:38:59

vatso
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### Re: Time Value of Money

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

## #4 2013-02-21 00:53:19

bobbym

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### 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.
I have the result, but I do not yet know how to get it.
All physicists, and a good many quite respectable mathematicians are contemptuous about proof.