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#1 2005-12-05 11:07:07
- Nestea
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- Registered: 2005-11-12
- Posts: 9
Compound Interest
Oleg borrowed $4,500, $4,000, $4,500, and $4,000 from his dad on September 1 of each of four successive years for college expenses. Oleg and his dad agreed to a loan at the rate of 7% compounded quarterly. If it is now 1 year from the last day that he borrowed money, how much would Oleg owe?
For full marks your answer should be rounded to the nearest cent.
Could someone please help me on this one? The answer is 20 322.85. Just to check if it's right.
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#2 2005-12-05 11:37:30
- Ricky
- Moderator
- Registered: 2005-12-04
- Posts: 3,791
Re: Compound Interest
Could you post your work as well?
"In the real world, this would be a problem. But in mathematics, we can just define a place where this problem doesn't exist. So we'll go ahead and do that now..."
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#3 2005-12-05 11:42:45
- Nestea
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- Registered: 2005-11-12
- Posts: 9
Re: Compound Interest
FV = PV(1 + i/4)4×n thats the formula I use. I can never get it right.
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#4 2005-12-05 11:52:13
- Nestea
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- Registered: 2005-11-12
- Posts: 9
Re: Compound Interest
I just need the n and im good. N = m (term)
N= Total number of compoundings
m = number of compounding per year
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#5 2005-12-05 14:59:58
- irspow
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- Registered: 2005-11-24
- Posts: 1,055
Re: Compound Interest
FV = PV(1 + i%)^(t) .... t would equal 4y in this case ... y as in years.
4500(1.07)^16 = 13284.73687
4000(1.07)^12 = 9008.766356
4500(1.07)^8 = 7731.837809
4000(1.07)^4 = 5243.18404
Oleg owes 35268.53
That is why no one should take a loan that is compounded quarterly!
I am at an age where I have forgotten more than I remember, but I still pretend to know it all.
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#6 2008-08-25 07:18:14
- Ms. Bitters
- Member
- Registered: 2008-07-31
- Posts: 19
Re: Compound Interest
Oleg borrowed $4,500, $4,000, $4,500, and $4,000 from his dad on September 1 of each of four successive years for college expenses. Oleg and his dad agreed to a loan at the rate of 7% compounded quarterly. If it is now 1 year from the last day that he borrowed money, how much would Oleg owe?
For full marks your answer should be rounded to the nearest cent.Could someone please help me on this one? The answer is 20 322.85. Just to check if it's right.
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