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Math Help - Compound interest...?

  1. #1
    Senior Member Mukilab's Avatar
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    Compound interest...?

    Bill invests 500 on the 1st Jan 2004 at a compound interest of R% per annum. The value, V, of this investment after n years is given by the formula V=500x(1.045)^n

    Write down the value of R

    O-o?????
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  2. #2
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    pickslides's Avatar
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    This formula usually looks like

    A=P\left(1+\frac{r}{100}\right)^n

    therefore your rate is 4.5
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  3. #3
    Senior Member Mukilab's Avatar
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    Quote Originally Posted by pickslides View Post
    This formula usually looks like

    A=P\left(1+\frac{r}{100}\right)^n

    therefore your rate is 4.5
    Could you explain A and P. Right now I assume A= V and P=500*(1.045)^n
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  4. #4
    Master Of Puppets
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    Quote Originally Posted by Mukilab View Post
    Could you explain A and P. Right now I assume A= V and P=500*(1.045)^n
    A is the output from the investment or loan

    P is 500 in your case, it is the amount invested or loaned
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  5. #5
    Senior Member Mukilab's Avatar
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    Can you go through the actual process?

    Ok A=P(1+ \frac{r}{100})^{n}

    So

    A=500(1+\frac{r}{100})^{n}

    Let's say n = 2

    A=500(1+\frac{r}{100})^{2} A=500(2+\frac{2r}{200}???
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  6. #6
    Master Of Puppets
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    Quote Originally Posted by Mukilab View Post

    Let's say n = 2

    A=500(1+\frac{r}{100})^{2} A=500(2+\frac{2r}{200}???
    The 2 does not distribute through like you have shown

    (a+b)^2 = (a+b)(a+b) \neq (2a+2b)

    I found your r by inspection as it was in the same form as something I was familiar with. To do what you have attempted you must have a value for A as well.
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  7. #7
    Senior Member Mukilab's Avatar
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    So I need a value for A? They just say that the value is V.

    I'll post the actual question when I find it, although I think it is unnecessary as I have posted all the core parts that I need answering, I am sure I have not missed something out
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  8. #8
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    e^(i*pi)'s Avatar
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    Quote Originally Posted by Mukilab View Post
    So I need a value for A? They just say that the value is V.

    I'll post the actual question when I find it, although I think it is unnecessary as I have posted all the core parts that I need answering, I am sure I have not missed something out
    A = V in your case

    You're expected to know the compound interest formula given in post 2
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  9. #9
    Senior Member Mukilab's Avatar
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    Quote Originally Posted by e^(i*pi) View Post
    A = V in your case

    You're expected to know the compound interest formula given in post 2
    From now on, every formula I come across in life I will plot onto my posters...
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