A principal earned interest at the net rate of 4% for 5 years.How many percent did the principal increase altogether during these 5 years?
There’s either a table or a formula in your book for calculating compound interest.
I prefer to use a spreadsheet, enter the formula for one year, and let the spreadsheet do the work. You can use your formula (or table) and check it against my spreadsheet:
yearprincipalrate . . . end of year
1 . . . $1.00 . . . 4.00% . . . $1.04
2 . . . $1.04 . . . 4.00% . . . $1.08
3 . . . $1.08 . . . 4.00% . . . $1.12
4 . . . $1.12 . . . 4.00% . . . $1.17
5 . . . $1.17 . . . 4.00% . . . $1.22
$1.22 - $1 = $.22
$.22 / 1 = 22%
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February 10th, 2010 at 10:42 pm
There’s either a table or a formula in your book for calculating compound interest.
I prefer to use a spreadsheet, enter the formula for one year, and let the spreadsheet do the work. You can use your formula (or table) and check it against my spreadsheet:
yearprincipalrate . . . end of year
1 . . . $1.00 . . . 4.00% . . . $1.04
2 . . . $1.04 . . . 4.00% . . . $1.08
3 . . . $1.08 . . . 4.00% . . . $1.12
4 . . . $1.12 . . . 4.00% . . . $1.17
5 . . . $1.17 . . . 4.00% . . . $1.22
$1.22 - $1 = $.22
$.22 / 1 = 22%
References :
February 10th, 2010 at 11:26 pm
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References :