Compound Interest

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Saumyojit

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A man saves Rs. 200 at the end of each year and lends the money at 5% compound interest. How much will it become at the end of 3 years?

My approach was:
Principle=200

Amt at end of 3 years = 200(1+ 5/100)^3=200 * 105/100 *105/100 *105/100 = 231.525
is this wrong?
 
Of course it is wrong. If no interest is earned from lending out the money then the man would have $600.

In your work you only loaned out $200 once!
 
231.525 including ci and p . Where u are seeing no interest is earned from lending out the money .
 
Saumyojit said:
231.525 including ci and p . Where u are seeing no interest is earned from lending out the money .
Click to expand...
I never said that you did not include interest.
Please re-read the problem and answer one question for me. How much money has the man loaned out?
 
if he lends out 200 at the first year ending then for how much should he get interest ?for 2 years ??
 
Saumyojit said:
A man saves Rs. 200 at the end of each year and lends the money at 5% compound interest. How much will it become at the end of 3 years?

My approach was:
Principle=200

Amt at end of 3 years = 200(1+ 5/100)^3=200 * 105/100 *105/100 *105/100 = 231.525
is this wrong?
Click to expand...
Saumyojit said:
if he lends out 200 at the first year ending then for how much should he get interest ?for 2 years ??
Click to expand...
Please clarify what you mean by the initial question. It is not clear when money is lent, or how often interest is compounded.

Your work, as well as the latest question, suggests that you understand it to mean that he lends Rs 200 at the end of year 1; everyone else is taking it to mean that he repeats this at the end of year 2 and (in principle, if you don't mind a pun) at the end of year 3. (I say the latter because the last loan is for 0 years, but it would seem that this amount is to be included).

But considering only this single quantity of 200, it appears to be lent for 2 years:
Code: 
0    1    2    3
+----+----+----+
     *=========>
It is lent at "*" and the total is calculated at ">".

So the exponent in your initial work is wrong, but the answer to your current question is "yes".

If there is only one lending, then the word "each" should not be there. If it is repeated, I would have worded it more like this:

Each year, a man saves Rs. 200; at the end of each year, he lends (or invests) the money at 5% interest, compounded annually. How much will he have at the end of 3 years, counting all the money saved, plus interest?​
 
ACtually lending is getting repeated 2 more times after 1st year right?
the savings are at year end, so the 200 deposited after first year will be 200(1+5/100)2 after end of three years because the duration is two years only (from first year end to third year end).
 
@Dr.Peterson
I dont understand one thing that if the man saves rs 200 at the end of every year then lending is happening for the next 3 year thats ok but for how many years is the man saving 200 . is he saving for infinte no of years and lending at the evry 200 saving??
 
Ask the author of the problem, who didn't tell us! (But I doubt the man will live forever.)

But in order to answer the question, we don't need to know what happens after the three years, so we can ignore the issue.
 
@Dr.Peterson
See u did not understand my doubt ... I am saying that the man is saving 200 in each of the year but it is not said that for how long this process will be going .

For each lending, he is giving borrower a time of 3 years to return with the amount.

Is my assumption right??
 
I think I understand fully. My answer was that you don't need to know. Therefore, your assumption is both unjustified and unnecessary.

Let me say this differently:

It doesn't matter how long the arrangement lasts. We are only asked the total amount three years from the start, at which time one loan will have had 2 years, the next 1, and the last 0. Don't even ask yourself what will happen after that, including whether each loan continues, or whether he continues making loans. That has no effect on the answer.
 
@Dr.Peterson for what The 3 years has been given? for each lending duration of 200 or other ?
if other then what is that other reason ?
 
How would I know? Ask the person who wrote the problem. Only they really know; and they don't seem willing to tell us anything in clear English. (I'm assuming that you copied the problem exactly as written by its author.)
 
@Dr.Peterson
u said that "We are only asked the total amount three years from the start, at which time one loan will have had 2 years, the next 1, and the last 0"

suppose the man saves 200 at the end of 2019 and lends it for 3 years . then at 2022 he will return
Amt at end of 3 years = 200(1+ 5/100)^3=200 * 105/100 *105/100 *105/100 = 231.525.

Then again in 2020 he is saving another 200 that means that 200 will get into 2019 scheme or it is something new scheme .??
 
@Dr.Peterson
see as much as i have understood in 2nd and 3rd year saving of 200 is added to principel of that year . but my question is how will i know that savings has to be added to every year principle ? is it a rule of loan or it has been said in the question may be i am not understanding it?
 
@Dr.Peterson
@MissKoa1a
@Jomo

See now i know what i am doing

My logic is that : I am considering the 3 years to be duration time of each deposit of each 200 rupees from the time i am lending . Thats why my each amt after 3 years is coming 231.5 of each 3 year set which when added gives me 231.5 ^ infinte .

But in the question 3 years means "I think the "at the end of 3 years" is 3 years from now, not 3 years from each deposit".

i think it is a english misread intepretetion of mine
 
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