Compounded Monthly? (1 Viewer)

[lowey123]

Hi there,

Say I get this example...$4000 is banked with compounded interest of %4.3 for 3 years. Calculate it if it is compounded;

a)Anually
b)Monthly
c)Weekly for three years?

How is this done? What formula..

I did:

a: $4000x1.043 x 3

Is thate evn right? Can someone please help me? Keep posted on this site as Ill ask more questions to. Please feel free to post questions as well..

Thankyou.

 

[honky tonk]

Sorry for the long post...

The first thing I like to do is make everything the same. (Make everything in years, months, days, etc.)

a) Annually

$4000 ... years
0.043 .... years
3 .......... years

Here, everything is the same, so you can use the formula:

Amount = 4000(1+0.043)

b) Monthly

$4000 ... years
0.043 .... months &nbsp;<-- This needs to be changed.
3 .......... years<-- This needs to be changed.

To make it all into the same amount, you change 0.043 into a monthly percentage (0.043 12) and then make the 3 years into 3 x 12 months (36).

Here, the formula is as followed:

Amount = 4000(1+0.003583) to the power of 36

c) Weekly

$4000 ... years
0.043 .... weeks &nbsp;<-- This needs to be changed.
3 .......... years<-- This needs to be changed.

To make it all into the same amount, you change 0.043 into a weekly percentage (0.043 52) and then make the 3 years into 3 x 52 weeks (156).

Here, the formula is as followed:

Amount = 4000(1+0.000827) to the power of 156

All answers are around the $4500 mark, which I think should be right.

Hope this helps (and I hope I didn't make any mistakes!)