Math Is Fun Forum

reallylongnickname

Member

Registered: 2011-03-30

Posts: 50

Cmpd Intrst

[tex] A=P(1+i)^n[/tex] for these types of formulas, If I go 1 + 0.088 / 2 the answer is = 1.044
but if I go 1+ 0.88 = 1.088 /2 the answer is = 0.544

Why does the "=" mess things up?

careless25

Real Member

Registered: 2008-07-24

Posts: 560

Re: Cmpd Intrst

Its not the "=" thats messes things up, its the order of operations, remember PEDMAS/BEDMAS?

In the first case you are doing division first 0.088/2 and the following the PEDMAS rules you add 1 which gives you 1.044

In the second case you are adding first and then dividing. thats why your answers differ

Bob

Administrator

Registered: 2010-06-20

Posts: 10,621

Re: Cmpd Intrst

hi reallylongnickname

I agree.  But why did you want that calculation anyway in a compund interest problem?

There's been a number of posts recently about compound interest.  I thought I knew all about it but then discovered 'compound interest compounded monthly' which was a new idea for me.  There are several formulas apart from the one you quote.  You might want to have a look at post 1 from

http://www.mathisfunforum.com/viewtopic.php?id=15354

The rest of the thread is just chatter (be warned!)

Bob

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Children are not defined by school ...........The Fonz
You cannot teach a man anything;  you can only help him find it within himself..........Galileo Galilei
Sometimes I deliberately make mistakes, just to test you!  …………….Bob