Compound interest: if interest of 0.05% per day, how much int. after 250 days?

CASTLEHARP

New member
Joined
Jan 5, 2017
Messages
5
Hi,

Really hoping someone can help me please.

If someone was paid interest of 0.05% per day and they let this compound. How much total interest would they receive at the end of 250 days.

And how do you calculate this please?

Thanks so much in advance. If anyone can help I would massively appreciate it!!!
 
Hi,

Really hoping someone can help me please.

If someone was paid interest of 0.05% per day and they let this compound. How much total interest would they receive at the end of 250 days.

And how do you calculate this please?

Thanks so much in advance. If anyone can help I would massively appreciate it!!!
What are your thoughts?

Please share your work with us ...even if you know it is wrong.

If you are stuck at the beginning tell us and we'll start with the definitions.

You need to read the rules of this forum. Please read the post titled "Read before Posting" at the following URL:

http://www.freemathhelp.com/forum/announcement.php?f=33
 
If someone was paid interest of 0.05% per day and they let this compound. How much total interest would they receive at the end of 250 days.

And how do you calculate this please?
To do the calculations, you use the compound-interest formula they gave you.

. . . . .\(\displaystyle A\, =\, P\, \left(1\, +\, \dfrac{r}{n}\right)^{nt}\)

...where "A" is the ending amount, "P" is the beginning amount (or "principal"), "r" is the interest rate per term (usually one year), "n" is the number of compoundings per term (such as "365" for "daily"), and "t" is the number of terms (usually the number of years).

Working from the formula and from the book's example exercise, how far can you get? If you get stuck, please reply showing your work, starting with which values you plugged in for which variables. Thank you! ;)
 
To do the calculations, you use the compound-interest formula they gave you.

. . . . .\(\displaystyle A\, =\, P\, \left(1\, +\, \dfrac{r}{n}\right)^{nt}\)

...where "A" is the ending amount, "P" is the beginning amount (or "principal"), "r" is the interest rate per term (usually one year), "n" is the number of compoundings per term (such as "365" for "daily"), and "t" is the number of terms (usually the number of years).

Working from the formula and from the book's example exercise, how far can you get? If you get stuck, please reply showing your work, starting with which values you plugged in for which variables. Thank you! ;)


Thank you very much Stapel and Subhotosh Khan for your responses, and I apologize for not fully famiiarising myself with the forum rules and sharing my working so far.

Unfortunately there wasnt much to share! This is actually a 'real life question' and I am not a maths student. My understanding of maths is very, very basic! Actually as far as I got was use an excel spreadheet to try and recreate the compounding scenario and this wasnt succesful.

But I appreciate the formula given, and am now going to try to work it out using that formula and will let you know how I get on!

thanks again
 
Thank you very much Stapel and Subhotosh Khan for your responses, and I apologize for not fully famiiarising myself with the forum rules and sharing my working so far.

Unfortunately there wasnt much to share! This is actually a 'real life question' and I am not a maths student. My understanding of maths is very, very basic! Actually as far as I got was use an excel spreadheet to try and recreate the compounding scenario and this wasnt succesful.

But I appreciate the formula given, and am now going to try to work it out using that formula and will let you know how I get on!

thanks again


Ok, so I have not got very far I am afraid.

For simplicity I am taking $1 as the principle 'P'.



Then for 'r' I am using 0.05 i.e the daily interest rate.

And for 't' I am using 250 i.e over 250 days.


So I know what values to plkug in, but my memory of high school maths 920 years ago) is failing me in remembering how to apply them in the formula. I.e what to do with the brackets, and what to do with 'nt'.

sorry, pathetic I know. Would really appreciate some help.

thanks for taking the time
 
Hrm... I have a quick question for some clarification, which will hopefully determine how you might want to proceed. The wording of your initial statement "paid interest of 0.05% per day" is a bit ambiguous to me. But here's how I interpreted it. Let's say the person being paid starts with $10,000. After one day, he would earn 0.05% of his money in interest, or $5, meaning he'd then have a total of $10,005. Is that correct?
 
Hrm... I have a quick question for some clarification, which will hopefully determine how you might want to proceed. The wording of your initial statement "paid interest of 0.05% per day" is a bit ambiguous to me. But here's how I interpreted it. Let's say the person being paid starts with $10,000. After one day, he would earn 0.05% of his money in interest, or $5, meaning he'd then have a total of $10,005. Is that correct?


Thanks for your reply ksdhart2. Yes your interpretation is correct, thanks!
 
a = initial amount (10,000)
n = number of compounding periods (250)
i = interest rate paid each cpd. period (.05)
f = future value (?)

f = a*(1 + i)^n

10000*1.05^250 = 1,983,009,375.3489...

You're rich!

Seriously: why did you pick 5% daily?


Ah I wish Denis!!! Sorry if I wasnt clear, it is actually 0.05% daily not 5%!
 
Sorry Denis, could you please help me with then calculation using 0.05% instead of 5%?

Could you please let me know what the function ^ means in the calculation?

Thanks!!!
 
"^" indicates an exponent. a(1+ r)^n means \(\displaystyle a(1+ r)^n\). a is the original amount, r is the interest, and n is the number of compounding intervals. Here, r= 0.0005 and n= 250. For any a, the final amount is \(\displaystyle a(1.0005)^{250}= a(1.1331)\). That is, again, the "final amount"- the original amount plus the interest. The interest itself is that minus a, 0.1331a.
 
Top