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Thread: compound interest

  1. #1
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    compound interest

    hello

    please i need help understanding both questions


    use the compound interest formula a= p(1+i)^n to answer the following questions:


    1 what type of equation is present if n is constant equal to 1, rather than a variable?

    2 what type of equation is present if i, A, or P are constant rather than variable?



    thanks
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  2. #2
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    Re: compound interest

    Quote Originally Posted by yorkmanz View Post
    hello

    please i need help understanding both questions


    use the compound interest formula a= p(1+i)^n to answer the following questions:


    1 what type of equation is present if n is constant equal to 1, rather than a variable?
    If $n$ is constant it is a polynomial equation in $p$

    2 what type of equation is present if i, A, or P are constant rather than variable?

    thanks
    There is no $P$ or $A$ in the equation. In $n$ is variable it is exponential in $n$.
    Thanks from topsquark
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  3. #3
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    Re: compound interest

    thanks for replying...


    for 1 since n is constant i think its just Simple interest and principle

    if

    n = 1

    =A = P(1+i)^n =

    =P(1+i)^1

    = P(1+i)


    now we know that i = r/n

    since r n=1,

    i = r = interest rate

    then we have A = P + P*i

    i think its just Simple interest and principle and we have

    now the This is a linear equation.


    for 2 TRICKY

    if i is a constant, this is an exponential equation `a=b^n` where `b=P(1+i)` , `b` a constant. if (In this case, P is a parameter)

    and so on for a, b


    please correct me if i am wrong

    thanks
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  4. #4
    Forum Admin topsquark's Avatar
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    Re: compound interest

    Quote Originally Posted by yorkmanz View Post
    then we have A = P + P*i
    One of the points that Walagaster was making is that Mathematics is "case sensitive." "A" and "a" are two different variables. So you need to decide: Is your equation $\displaystyle a = p (1 + i)^n$ or $\displaystyle A = P(1 + i) ^n$. This might seem a minor point but it does need to be addressed.

    -Dan
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