# Compound interest.

• Dec 20th 2011, 01:15 AM
jusween
Compound interest.
here is the question

Harry and Potter both would want to have RM 5000, each, to buy a motorcycle. Harry makes a deposit of RM 750 at an interest rate of 4% compounded monthly. If the time taken by both is the same, calculate the annual interest rate charged to Potter if he deposited RM 450 compounded quarterly.

• Dec 21st 2011, 10:21 AM
SpringFan25
Re: Compound interest.
where are you stuck?

start by working out how long it takes harry to get RM 5000.
• Jan 5th 2012, 08:06 AM
amul28
Re: Compound interest.
First you will have to find the term, you can find this using the data given for Harry.
Then taking that term into context for Potter and find interest rate correspondingly.
• Jan 5th 2012, 09:26 AM
e^(i*pi)
Re: Compound interest.
Quote:

Originally Posted by jusween
here is the question

Harry and Potter both would want to have RM 5000, each, to buy a motorcycle. Harry makes a deposit of RM 750 at an interest rate of 4% compounded monthly. If the time taken by both is the same, calculate the annual interest rate charged to Potter if he deposited RM 450 compounded quarterly.

The compound interest formula is $\displaystyle A = P\left(1+\dfrac{r}{n}\right)^{nt}$
Get an equation for each one, set the time equal and solve for $\displaystyle r_2$