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Math Help - Interest Calculations

  1. #1
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    Jun 2009
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    Interest Calculations

    Hi, I'm new here and would really appreciate some help with my calculations.

    I from the UK and here at the moment there is a lot of consumers reclaiming back money from the big banks for mis-selling insurance products that were useless to the consumer and I am trying to calculate exactly how much is owed to me.

    The government has allowed all claims to be paid with a statutory interest rate of 8% per year.

    so that would work at 0.66% a month right?

    Month 1 i pay 30 for my insurance
    Month 2 my 30 is now worth 30.20 (30 x 0.66%) and another 30 is paid so total is now 60.20
    Month 3 my 60.20 is now worth 60.60 and another 30 is paid so total owed to me is now 90.60.
    Month 4 my 90.60 is now worth 91.20 and another 30 is paid so total owed to me is now 121.20
    Month 5 my 121.20 is now worth 121.99 and another 30 is paid to total owed to me is now 151.20.....

    and so forth and so forth....


    Any help would be appreciated. Thanks
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  2. #2
    Super Member
    Joined
    Jan 2009
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    591
    Quote Originally Posted by JustChris20 View Post
    Hi, I'm new here and would really appreciate some help with my calculations.

    I from the UK and here at the moment there is a lot of consumers reclaiming back money from the big banks for mis-selling insurance products that were useless to the consumer and I am trying to calculate exactly how much is owed to me.

    The government has allowed all claims to be paid with a statutory interest rate of 8% per year.

    so that would work at 0.66% a month right?

    Month 1 i pay 30 for my insurance
    Month 2 my 30 is now worth 30.20 (30 x 0.66%) and another 30 is paid so total is now 60.20
    Month 3 my 60.20 is now worth 60.60 and another 30 is paid so total owed to me is now 90.60.
    Month 4 my 90.60 is now worth 91.20 and another 30 is paid so total owed to me is now 121.20
    Month 5 my 121.20 is now worth 121.99 and another 30 is paid to total owed to me is now 151.20.....

    and so forth and so forth....


    Any help would be appreciated. Thanks
    The government has allowed all claims to be paid with a statutory interest rate of 8% per year.
    Typically this DOES NOT allow monthly compounding.

    At the end of the first YEAR you would have
     30 \times 0.08 = 2.4 INTEREST.
    30 + 2.40 = 32.40 at the start on the following year.

     32.40 \times 0.08 = 2.592 INTEREST gain during the second year.

    32.4 + 2.592 = 34.992 at the end of the second YEAR and the beginning of the third year.

    The interest will only be compounded only on a YEARLY basis.

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