# Thread: 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, 2. ## Re: Easy-ish compound discount/interest conversions.... Originally Posted by Outsanity 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