Results 1 to 9 of 9

Math Help - Need help with annualized*yield*calculation

  1. #1
    Newbie
    Joined
    Mar 2010
    Posts
    5

    Post Need help with annualized*yield*calculation

    Hello everyone, I've been stumped on finding a solution for the following problem and was hoping you could help me out.
    I am trying to find the interest percentage for the following problem and the formula for solving it.

    The goal is to find the interest rate needed to reach 1,035,479.

    Code:
    Beginning   Days    Deposits    Interest      Balance
      240,000     0        0            0         240,000
      240,000    365     41,514       69,647      351,161
      351,161    365     41,514      101,905      494,580
      494,580    365     41,514      143,525      679,619
      679,619    365     41,514      197,834      918,967
      918,967    171       0         116,512     1,035,479
    Now, the answer to this problem is roughly 25.4882460120608%.
    But I can't seem to find a formula to come to this answer.

    Any help would be most appreciated.
    Follow Math Help Forum on Facebook and Google+

  2. #2
    MHF Contributor
    Joined
    Dec 2007
    From
    Ottawa, Canada
    Posts
    3,106
    Thanks
    68
    Cannot be calculated by formula.
    Iteration (fancy term for "hit and miss"!) required.

    By the way, how did you get 25.488...% ?
    69647 / 240000 = .29019.... hence real close to 29%.
    Follow Math Help Forum on Facebook and Google+

  3. #3
    Newbie
    Joined
    Mar 2010
    Posts
    5

    Post More detail

    Thanks Wilmer.

    The interest is compounded daily and the following formula is used to calculate the amount of interest in the Interest column.

    (APY) Interest amount = (((1 + (Interest Rate/365))^days)*balance)-balance

    In the current problem it would look like (((1 + (25.488...%/365))^365)*240,000)-240,000 = 69,647

    I'm trying to create a coded function that will do the calculation, so any details on the exact iteration process needed would help.
    Follow Math Help Forum on Facebook and Google+

  4. #4
    MHF Contributor
    Joined
    Dec 2007
    From
    Ottawa, Canada
    Posts
    3,106
    Thanks
    68
    Well then, that sure makes the problem easier.
    Since 69647 as the interest on 240000 for 365 days is a given,
    then the effective annual rate = 69647 / 240000 = .2901958....

    This rate is achieved by compounding daily, hence:
    (1 + i)^365 = 1.2901958
    1 + i = 1.2901958^(1/365)
    i = 1.2901958^(1/365) - 1 = .0006983...
    annual equivalent: .0006983 * 365 = ~.25488

    Amen.
    Follow Math Help Forum on Facebook and Google+

  5. #5
    Newbie
    Joined
    Mar 2010
    Posts
    5
    Sorry to be going in circles. I keep leaving out important details it seems.
    The interest (69647) is not given in the problem I'm trying to solve.
    The only known values are the starting value, the days between deposits, the deposit amount, and what they should come to (1,035,479).
    The reason the interest is given in my example is because it has been already solved in that instance.
    Follow Math Help Forum on Facebook and Google+

  6. #6
    MHF Contributor
    Joined
    Dec 2007
    From
    Ottawa, Canada
    Posts
    3,106
    Thanks
    68
    Quote Originally Posted by CptHector View Post
    The only known values are the starting value, the days between deposits, the deposit amount, and what they should come to (1,035,479).
    You need another information, WHEN the 1,035,479 is to be reached.
    Like, is the 171 days of 5th year a given?
    Follow Math Help Forum on Facebook and Google+

  7. #7
    Newbie
    Joined
    Mar 2010
    Posts
    5
    Here is the table again except with only the known values.

    Code:
    Beginning   Days    Deposits    Interest      Balance
      240,000     0        0            0         240,000
                 365     41,514
                 365     41,514
                 365     41,514
                 365     41,514
                 171       0                    1,035,479
    Follow Math Help Forum on Facebook and Google+

  8. #8
    MHF Contributor
    Joined
    Dec 2007
    From
    Ottawa, Canada
    Posts
    3,106
    Thanks
    68
    Ahhh...I see...wish you had started off with this!!

    As I said before, ITERATION is required.
    Have a look here (don't faint!):
    www.math.mcgill.ca/~mei/Wei_Wu_Mei.pdf

    I'm no expert on the process...so BYE.
    Follow Math Help Forum on Facebook and Google+

  9. #9
    Newbie
    Joined
    Mar 2010
    Posts
    5
    Thanks for the link. It looks like I'll be learning Algebraic Iteration.

    Thanks again for your time.
    Follow Math Help Forum on Facebook and Google+

Similar Math Help Forum Discussions

  1. what is running yield?
    Posted in the Business Math Forum
    Replies: 1
    Last Post: May 20th 2011, 12:47 AM
  2. yield to maturity help
    Posted in the Business Math Forum
    Replies: 1
    Last Post: February 26th 2011, 09:14 PM
  3. annualized return projection
    Posted in the Advanced Applied Math Forum
    Replies: 0
    Last Post: January 8th 2009, 07:58 AM
  4. Theoretical yield
    Posted in the Advanced Applied Math Forum
    Replies: 2
    Last Post: May 18th 2008, 06:03 AM
  5. Effective yield
    Posted in the Business Math Forum
    Replies: 3
    Last Post: January 5th 2007, 01:22 AM

Search Tags


/mathhelpforum @mathhelpforum