Results 1 to 2 of 2

Math Help - Easy-ish compound discount/interest conversions....

  1. #1
    Newbie
    Joined
    Jun 2012
    From
    NYC
    Posts
    2

    Easy-ish compound discount/interest conversions....

    An account is governed by compound interest. The discount for three years on $2120 is $250. Find the amount of interest for two years on $380.

    I guess my first question is "What is the meaning of "The discount for three years on $2120 is $250"?"
    Is it accumulating on a discount, and that's the amount accumulated? Or is it like, borrowing on a discount, and that's the amount paid in advance?

    Secondly, how would I solve that?

    Thanks,
    Follow Math Help Forum on Facebook and Google+

  2. #2
    MHF Contributor
    Joined
    Dec 2007
    From
    Ottawa, Canada
    Posts
    3,110
    Thanks
    68

    Re: Easy-ish compound discount/interest conversions....

    Quote Originally Posted by Outsanity View Post
    An account is governed by compound interest. The discount for three years on $2120 is $250. Find the amount of interest for two years on $380.

    I guess my first question is "What is the meaning of "The discount for three years on $2120 is $250"?"
    Is it accumulating on a discount, and that's the amount accumulated? Or is it like, borrowing on a discount, and that's the amount paid in advance?
    2120 due in 3 years is worth 2120-250 = 1870 today
    Need to calculate interest rate compounded annually:
    1870(1 + r)^3 = 2120 ; solve to get r = ~.0427 (~4.27%).

    Calculate 2 years at that rate on 380:
    380(1.0427)^2 = ? ; wrap it up
    Follow Math Help Forum on Facebook and Google+

Similar Math Help Forum Discussions

  1. Compound interest at changing interest rates
    Posted in the Business Math Forum
    Replies: 2
    Last Post: October 21st 2010, 04:55 AM
  2. Easy Question - Simple Interest, Simple Discount
    Posted in the Business Math Forum
    Replies: 0
    Last Post: September 21st 2010, 08:22 PM
  3. Interest vs Discount problem
    Posted in the Business Math Forum
    Replies: 2
    Last Post: January 24th 2010, 04:45 AM
  4. Interest/Discount Rate
    Posted in the Business Math Forum
    Replies: 2
    Last Post: September 1st 2009, 04:06 AM
  5. Compound discount question
    Posted in the Business Math Forum
    Replies: 2
    Last Post: October 16th 2008, 09:19 AM

Search Tags


/mathhelpforum @mathhelpforum