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Math Help - Compound Interest

  1. #1
    stevebonnett
    Guest

    Compound Interest

    Hey guys, i need with this.

    To make $20,000 in 3 years, Sally decides to make 6 equal deposits in an account at 6-monthly intervals starting now. If the interest rate is 11% per annum compounded semi-annually, how much is each deposit?
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  2. #2
    Super Member

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    Hello, Steve!

    To make $20,000 in 3 years, Sally decides to make 6 equal deposits
    in an account at 6-monthly intervals starting now.
    If the interest rate is 11% per annum compounded semi-annually,
    how much is each deposit?

    This is an Annuity problem.
    If you're not familiar with the formula, you're in deep weeds . . .

    Annuity formula: . A \;=\;D\,\frac{(1+i)^n-1}{i}

    . . where: . \begin{Bmatrix}A &=& \text{final amount} \\ D &=& \text{periodic deposit} \\ i &=& \text{periodic interest rate} \\ n &=& \text{number of periods} \end{Bmatrix}


    We have: . A = 20,000,\; i = \frac{11\%}{2} = 0.055,\;n = 6
    . . and we might as well solve for D\!:\;\;D \;=\;A\,\frac{i}{(1+i)^n-1}


    So we have: . D \;=\;20,000\,\frac{0.055}{(1.055)^6-1} \;=\;2903.578952


    Therefore, Sally should deposit $2903.58 each time.

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  3. #3
    karlahaze
    Guest

    I know there is a limit to be eligible for a grant

    I am looking for a student grant if am going to college? I don't want any student loan because I can't pay it back. How much money you have to make per year to be eligible for the federal student aid grant? The grant you don't have to pay it back? I know there is a limit to be eligible for a grant. Does any body know? Or if there like a chart that showing how much money you make and how much money you get.
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