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Math Help - Financial mathematics (Geometric progression)

  1. #1
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    Financial mathematics (Geometric progression)

    How much money have we on our bank account, if the bank can gave us at the end of every month 200$, for three years. The rate is 4% per anno, (that's 4% per year), decursive interest-rate, and the capitalisation time is one year.
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  2. #2
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    Quote Originally Posted by Nforce View Post
    The rate is 4% per anno, (that's 4% per year), decursive interest-rate, and the capitalisation time is one year.
    Could you please rewrite this in "understandable" terms?
    Like, does $100 get interest of $4 after 1 year? Thank you.
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    Quote Originally Posted by Wilmer View Post
    Like, does $100 get interest of $4 after 1 year?
    Yes. But in the second year we get interest of 4,16$, because we have interest-on-interest. (4% of 104$ is 4,16%) And so on...
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    Quote Originally Posted by Nforce View Post
    Yes. But in the second year we get interest of 4,16$, because we have interest-on-interest. (4% of 104$ is 4,16%) And so on...
    You mean 12 monthly or continuous interest? I think the other fellow was asking about the stuffs like PV, FV, I, n, etc.
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    I mean continuous interest. For three years. (read my first post again) It should be solved with the help of geometric progression, but i always get a wrong result.
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  6. #6
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    Quote Originally Posted by Nforce View Post
    Yes. But in the second year we get interest of 4,16$, because we have interest-on-interest. (4% of 104$ is 4,16%) And so on...
    Ok; next time, simply say "4% compounded annually".
    Please use 4.16 (not 4,16) and $104 (not 104$); less confusion.

    1st step is to get equivalent rate compounded monthly, since the $200 is paid monthly:
    (1 + i)^12 = 1.04
    1 + i = 1.04^(1/12)
    i = 1.04^(1/12) - 1 ; that comes out to .00327....

    Next is calculate present value (PV) of 36 monthly payments of $200:
    (formula is : PV = p[1 - 1/(1 + i)^n] / i)
    since p = 200, n = 36 and i = .00327 :
    PV = 200(1 - 1/1.00327^36) / .00327 ; roughly $6,781.92

    Tu est d'accord?
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