HELP - Compound Interest etc........ Watch

Deshi
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Seriously stuck on this question, I have managed to get an answer of £252.92, but I did this with pure working out and no formulas. I'm struggling to use the formula (compound interest formula) due to the part of the question which tells you the person is putting £50 more in every month. Any help will be appreciated or if anyone thinks my answer is right I'd also like to know. All help will be rewarded!


Q1. The bank offers a deal to savers. If they invest at least £50 per month, after an initial deposit of £50, then they will receive an annual rate of interest of 5% for the first two years, and 0.5% per annum thereafter. If the required sums are not made, then the interest rate for the first two years will be 2%. Interest will be compounded quarterly on the last day of the quarter. The higher interest rate applies to each quarter when all the required sums have been deposited for that quarter.
a) If the investor invests the minimum sums, how much will she have in her account at the end of four months?
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Deshi
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(Original post by Karma Charger)
x
Have you done this assignment yet?! Left my notes at my flat and I am now struggling.
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Karma Charger
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(Original post by Deshi)
Have you done this assignment yet?! Left my notes at my flat and I am now struggling.
**** completely forgot about this! When is it due?
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Deshi
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(Original post by Karma Charger)
**** completely forgot about this! When is it due?
:facepalm2:

Wednesday
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Karma Charger
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(Original post by Deshi)
:facepalm2:

Wednesday
F.M.L There goes my tuesday
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Karma Charger
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#6
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I'm gonna have a look at it now, but don't get your hopes raised
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Karma Charger
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(Original post by Deshi)
Seriously stuck on this question, I have managed to get an answer of £252.92, but I did this with pure working out and no formulas. I'm struggling to use the formula (compound interest formula) due to the part of the question which tells you the person is putting £50 more in every month. Any help will be appreciated or if anyone thinks my answer is right I'd also like to know. All help will be rewarded!


Q1. The bank offers a deal to savers. If they invest at least £50 per month, after an initial deposit of £50, then they will receive an annual rate of interest of 5% for the first two years, and 0.5% per annum thereafter. If the required sums are not made, then the interest rate for the first two years will be 2%. Interest will be compounded quarterly on the last day of the quarter. The higher interest rate applies to each quarter when all the required sums have been deposited for that quarter.
a) If the investor invests the minimum sums, how much will she have in her account at the end of four months?
I'm thinking you use the compound growth when interest is added n times a year :beard: If it's 5% an annum, the interest is 0.416% per month. You start off with 100 pounds, so that's your a value. Then just use the formula individually for each month with your a value being the value plus interest plus 50? Could be utter garbage though
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Deshi
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Yeah but the interest only gets compounded once a quarter, so every three months, hence why I am reluctant to use the formula as the interest only gets compounded at the end of the third month and not the first,second or fourth?
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Karma Charger
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FML didn't even read the question properly
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Karma Charger
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#10
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(Original post by Deshi)
Yeah but the interest only gets compounded once a quarter, so every three months, hence why I am reluctant to use the formula as the interest only gets compounded at the end of the third month and not the first,second or fourth?
Do you have the Renshaw textbook?
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Deshi
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No

I'm stuck using this atm as the powerpoints aren't really helping but it is still pretty decent (page 14 onwards)

http://www.ntu.ac.uk/METAL/Resources...ning/55848.pdf
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Karma Charger
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(Original post by Deshi)
No

I'm stuck using this atm as the powerpoints aren't really helping but it is still pretty decent (page 14 onwards)

http://www.ntu.ac.uk/METAL/Resources...ning/55848.pdf
Do you have any of the textbooks?! Stingy *******
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Karma Charger
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#13
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Wait what am I talking about. Just get to 150 quid for the 3rd month, add the interest then add another 50 quid
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Deshi
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I'm going to watch the footy so will reply back at HT or something.
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Karma Charger
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200 quid not 150
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Deshi
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You still get interest on the fourth month though, it's just not compounded...I think

Does no-one else on this site do economics ffs
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Karma Charger
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Yeah but it's not added on though is it?
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Deshi
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#18
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Yeah I'm pretty sure it is added on at a rate of 5/12%........
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Karma Charger
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#19
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Interest will be compounded quarterly on the last day of the quarter
So it's only added on every 3 months, so you don't add the interest in the 4th month?
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Karma Charger
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#20
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Wow that last post showed how little I know about Economics
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