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Math Help - Compound Interest

  1. #1
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    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?
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  2. #2
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    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.
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  3. #3
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    Re: Compound Interest

    Quote Originally Posted by zhandele View Post
    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.
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