Acumulated Present Value QUestion
- Thread starter biddumGuy
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- Apr 12, 2005
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Are you serious?
1) You showed no work. How shall anyone determine if you know what you are doing?
2) Let's see 2700 * 10 = 27,000. That is quite a bit greater than 17.18. Something mighty fishy going on in there. Perhaps you mean just the accumulation factor? If so, you should say that.
Annual Compounding, Beginning of the Year (1.1^1 + 1.1^2 + ... + 1.1^10) = (1.1 - 1.1^11)/(1-1.1) = 17.531167
SemiAnnual Compounding, Beginning of the Period (1/2)*(1.05^1 + 1.05^2 + ... + 1.05^20) = (1/2)*(1.05 - 1.05^21)/(1-1.05) = 17.359626
Okay, your answer is in the right direction.
Quarterly Compounding, Beginning of the Period (1/4)*(1.025^1 + 1.025^2 + ... + 1.025^40) = (1/4)*(1.025 - 1.025^41)/(1-1.025) = 17.271904
Still looking good.
Monthly Compounding, Beginning of the Period (1/12)*(1.00833^1 + 1.00833^2 + ... + 1.00833^120) = (1/12)*(1.00833 - 1.00833^121)/(1-1.00833) = 17.212668
I am beginning to believe.
Weekly Compounding, Beginning of the Period (1/52)*(1.001923^1 + 1.001923^2 + ... + 1.001923^520) = (1/52)*(1.001923 - 1.001923^521)/(1-1.001923) = 17.189721
One more.
Daily Compounding, Beginning of the Period (1/365)*(1.000274^1 + 1.000274^2 + ... + 1.000274^3650) = (1/52)*(1.000274 - 1.000274^3651)/(1-1.000274) = 17.183802
If we learned nothing else in this exploration, we learned how to EXPLORE the result and the process. Can you demonstrate the actual limit?
1) You showed no work. How shall anyone determine if you know what you are doing?
2) Let's see 2700 * 10 = 27,000. That is quite a bit greater than 17.18. Something mighty fishy going on in there. Perhaps you mean just the accumulation factor? If so, you should say that.
Annual Compounding, Beginning of the Year (1.1^1 + 1.1^2 + ... + 1.1^10) = (1.1 - 1.1^11)/(1-1.1) = 17.531167
SemiAnnual Compounding, Beginning of the Period (1/2)*(1.05^1 + 1.05^2 + ... + 1.05^20) = (1/2)*(1.05 - 1.05^21)/(1-1.05) = 17.359626
Okay, your answer is in the right direction.
Quarterly Compounding, Beginning of the Period (1/4)*(1.025^1 + 1.025^2 + ... + 1.025^40) = (1/4)*(1.025 - 1.025^41)/(1-1.025) = 17.271904
Still looking good.
Monthly Compounding, Beginning of the Period (1/12)*(1.00833^1 + 1.00833^2 + ... + 1.00833^120) = (1/12)*(1.00833 - 1.00833^121)/(1-1.00833) = 17.212668
I am beginning to believe.
Weekly Compounding, Beginning of the Period (1/52)*(1.001923^1 + 1.001923^2 + ... + 1.001923^520) = (1/52)*(1.001923 - 1.001923^521)/(1-1.001923) = 17.189721
One more.
Daily Compounding, Beginning of the Period (1/365)*(1.000274^1 + 1.000274^2 + ... + 1.000274^3650) = (1/52)*(1.000274 - 1.000274^3651)/(1-1.000274) = 17.183802
If we learned nothing else in this exploration, we learned how to EXPLORE the result and the process. Can you demonstrate the actual limit?