Compound Interest

survival · 2011-04-12 05:52:39

Hello,
If I save $85.00 in a savings account with 6% interest which compounds monthly, how much money will I have after 1 yr/ 10 yrs./ 20 yrs. and 30 yrs. This is by a formula of A = P (1 + r/m) n. I did not know how to get that n up to the top of the last part of the formula.)
Thank you!

bobbym · 2011-04-12 06:34:54

Hi survival;

You can go here:

http://www.mathsisfun.com/money/compoun … lator.html

survival · 2011-04-12 06:54:56

thank you, bobbym.

bobbym · 2011-04-12 06:57:03

Hi;

I thought that once you see it actually working then if you want we can over some of it. Seeing something work is a good way of eliminating the age old question of what is it good for.

Want to do one by hand with me?

survival · 2011-04-12 08:13:30

if i do this on my calculator it does not come out like that site. i have $98.00 (sorry i added the first wrong)

98 x 12 =1176 total money to start with the first year.
98x 6(%) x 12 (months)=7056. Is that the total savings with 6%?

then 98 x that amount for 10/20/30 years?

bobbym · 2011-04-12 08:22:19

Hi survival;

If you are not getting the answer there then you are probably doing something wrong.

survival · 2011-04-12 08:29:15

i do not mean to but it is that way

bobbym · 2011-04-12 08:30:29

It is okay. Please restate your problem with the new figures you want to use.

survival · 2011-04-12 08:44:07

98 dollars (98.00)
the account has 6% interest which compounds monthly, how much money would i have after 1 yr.? 10 yrs? after 20 yrs? after 30 yrs?

bobbym · 2011-04-12 08:45:39

Do you deposit money each month into the account?

survival · 2011-04-12 08:52:41

it is class. i have the problem to figure out.

the 98.00 is the amount i am supposed to have in my account.
the 6% is the rate that compounds monthly and they want to know how much i will have after 1, 10, 20 and 30 yrs.

survival · 2011-04-12 08:54:13

yes it looks like it goes in there every month.

bobbym · 2011-04-12 08:55:37

So you are depositing 98 dollars per month.

survival · 2011-04-12 08:59:21

yes so it is $98.00 X 12 (1 yr.)=$1, 176.00 before any compounded interest

bobbym · 2011-04-12 09:00:28

Yes, please hold now while I do some calculating.

survival · 2011-04-12 09:11:04

thank you

bobbym · 2011-04-12 09:17:25

Okay and bear with me, I am the worst with financial calculations. I only have 47 bucks in my checking account so...

I am getting $ 1312.929 Now I imagine that banks will round down to $1312.92 rather than round up to $1312.93

survival · 2011-04-12 09:23:46

is this for one year? or 10 years?

bobbym · 2011-04-12 09:30:04

1 year.

survival · 2011-04-12 09:34:16

thank you

bobbym · 2011-04-12 09:35:31

Please check it. Get back to me when you do.

survival · 2011-04-12 09:37:58

i will. i am working on 3 more class homework today besides this one

bobbym · 2011-04-12 09:40:05

Yikes! Home work as you can see is made up of 2 four letter words and should be outlawed.

Bob · 2011-04-12 19:25:31

hi survival and bobbym,

This looks like the problem

http://www.mathisfunforum.com/viewtopic.php?id=15166

But I'm not sure if the interest rate is 6% per month (ok but seems rather generous in the current economic climate) or 6% per year.

So I've used Ad's spreadsheet with $98 instead of £100 and used both rates. see below The first is 6% per month; the second is 6% per year.

Bob

bobbym · 2011-04-12 20:22:14

Hi Bob;

I used a recurrence relation. This gets the same answer.

http://illuminations.nctm.org/ActivityD … spx?id=172

Put in a principal of 98 and monthly additions of 98. 1 year ( it is compounded monthly ) at 6 %.

Math Is Fun Forum

#1 2011-04-12 05:52:39

Compound Interest

#2 2011-04-12 06:34:54

Re: Compound Interest

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