OK, if I get a 4% APY for 6 months.

With how much money do I end up when starting off with 5 000 $ after 6 months?

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- Aug 22nd 2008, 09:34 PMDonPatricioInterst Problem (Percent)
OK, if I get a 4% APY for 6 months.

With how much money do I end up when starting off with 5 000 $ after 6 months? - Aug 23rd 2008, 05:49 AMTKHunny
This question makes no sense at all. Please try again.

"I get a 4% APY for 6 months."

This is insufficient. You MUST specify the compounding methodology. Simple, compound, days, months, and on and on...

"With how much money do I end up when starting off with 5 000 $ after 6 months?"

Ambiguous. Is the $5000 at the beginning of the 6 months or at the end of the six months? - Aug 23rd 2008, 10:41 AMDonPatricio
It is compounded daily and yes you start off with 5000 $.

thanks - Aug 23rd 2008, 12:02 PMmikeedlathink it out
first you need to figure out the daily interest rate

so if 4% a year than (4/365)% a day.

now you start off with 5000

and after day one with 4% APY you have 5000 * (100 + 4/365)%

then you times that by another (100+4/365)% everyday.

365/2 is the amount of days you decide on the rounding.

now that would take a long time to calculate so we will use algebra.

5000 * (100 + 4/365)% ^ (365/2)

see how useful exponents are!!!

I hope this helps - Aug 23rd 2008, 01:12 PMTKHunny
Please never say that again. (Worried)

Quote:

It is compounded daily and yes you start off with 5000 $.

thanks

1) Include the COMPLETE problem statement, exactly as worded.

2) Show your work. You CAN'T have NO idea.

You still haven't specified the compounding method very well. Some use 365 days, others use 360 days. There are various other methods, as well.

Daily compounding of $5000 over 6 months using 360 days and 30-day months is no problem:

(1 + 0.04/360)^(360/2)

Daily compounding of $5000 over 6 months using 365 days and exact-day months is a bit trickier:

(1 + 0.04/365)^(181) From January or February, not a leap year.

(1 + 0.04/365)^(184) From March or May or Jul or Aug

(1 + 0.04/365)^(183) From April or Jun

(1 + 0.04/365)^(181) From September or November, next year not a leap year.

(1 + 0.04/365)^(182) From October or December, next year not a leap year.

See what I mean? You really need to specify EXACTLY what it is you are doing.