# Compound Interest

• Mar 12th 2013, 06:40 PM
elmidge
Compound Interest
How do you calculate t in the following example using logs?

An investment of \$10000 at the rate of 8% pa, compounded quarterly, how long will it take to reach \$14800?
• Mar 12th 2013, 07:08 PM
zhandele
Re: Compound Interest
Well, 8% per annum is equal to 2% per quarter, I think. So every quarter you're multiplying your balance on hand by 1.02. You just have to figure out how many times you need to repeat that multiplication. See the pdf.

I just asked my computer to do the last step. Aren't you glad we don't have to look up logs in tables and interpolate them, like our parents did?

Gold Coast? I think there's a place in Australia by that name.
• Mar 12th 2013, 08:11 PM
Shakarri
Re: Compound Interest
Quote:

Originally Posted by zhandele
Well, 8% per annum is equal to 2% per quarter, I think. So every quarter you're multiplying your balance on hand by 1.02

8% per anum would be (1.08)1/4 per quarter.

If r is the rate per quarter then after N quarters you will have rN times your original investment.