Compound discount question

Printable View

October 16th 2008, 08:36 AM
paulrb

Compound discount question

Edit: I have figured out how to solve this problem

"An account with initial amount $B earns compound interest at an annual effective interest rate i. The interest in the third year is $426, and the discount in the seventh year is $812. Find i."

I know how to solve this problem with a graphing calculator or program that can solve variables, but I'm only allowed to use a regular calculator on the upcoming test. How can I set up the equations in this problem to solve for i in a minimal amount of time?
October 16th 2008, 09:09 AM
jonah

$ F = P\left( {1 + i} \right)^n \Leftrightarrow i = \left( {\frac{F} {P}} \right)^{\frac{1} {n}} - 1 = \sqrt[n]{{\frac{F} {P}}} - 1 $
October 16th 2008, 09:19 AM
paulrb

Thank you for trying to help, but what you posted is already familiar to me.

My problem is trying to set up a system of equations from which I can solve for i on paper (a numerical answer for i). I can't find a strategy to solve that works on paper without taking a very very long time.