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What is the interest rate needed for an investment of 7000 to grow to an amount of 9500 in 3 years if interest is compound monthly?
Wiki User
∙ 13y ago
The formula to calculate the present amount including compound interest is,
A = P(1 + r/n)nt , where P is the principal amount, r is the annual rate expressed as a decimal , t is the number of years, and n is number of times per year that interest is compounded.
9500 = 7000(1 + r/12)^(12 x 3) = 7000(1 + r/12)^36
Then, (1 + r/12)^36 = 9500 / 7000 = 1.3571429 approx
(1 + r/12) = 36√1.3571429 ≅ 1.0085189
r/12 = 0.0085189
r = 12 x 0.0085189 ≅ 0.1022268
Then the required interest rate is 10.223% (3dp)
Wiki User
∙ 13y ago
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What is meant by the term compound interest?
Compound interest means that the amount of interest earned during a period increases the principal, which is then larger for the next interest period.
What amount of compound interest can be obtained on an amount of rs 9650 at the rate of 6 pcpa at the end of 3 years?
= 9650*[(1.06)3 - 1]= 9650*0.191016 = 1843.30
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Compound interest is better than simple (or "nominal") interest because compound interest allows you to add your accumulated interest back to your total every given term (i.e. each day, each week, each month, quarterly, annually, etc.), thus increasing the amount of money you are earning interest on.Example:Say you deposit 100 dollars for 2 years at 10% per year in 2 banks, one which does not compound your interest (Bank A), and one that compounds annually (Bank B).Bank A:After 1 year: 100 x 1.10 (1.10 = your amount + 10%) = 110After 2 years: 100 x 1.20 (1.20 = your amount +10% x 2) = 120Bank B:After 1 year: 100 x 1.10 = 110but then instead of using 100 again, you add the additional 10 back into your total and collect interest on 110 dollars in year two.So:After 2 years: 110 x 1.10 (1.10 = your amount + 10%) = 121
Flowchart to find compound interest and amount?
start accept P ci =A-P A=P+i Print Ci Print C STOP
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A simple formula can be used to calculate the amount the dollar invested is worth over a monthly period. Use PV*(1+R)/N where PV is your present investment, R is your interest rate and N is the number of investment periods.
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The effect of compound interest is that interest is earned on the accrued interest, as well as the principal amount.
After 6 years what is the total amount of a compound interest investment of 35000 at 4 percent interest compounded quarterly?
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The concepts of simple interest and compound interest and how these affected the results of your investment exercise?
Simple interest (compounded once) Initial amount(1+interest rate) Compound Interest Initial amount(1+interest rate/number of times compounding)^number of times compounding per yr
What interest applies when interest for each year is based on the amount of the loan or investment?
When each interest calculation uses the initial amount, this is called Simple Interest. The other type is Compound Interest, which uses the current balance as the basis for interest calculation.
How do you find the original investment when given the time and interest?
Not enough information. You also need to know: * The final amount of money * Whether simple or compound interest is known
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An investment interest calculator will calculate the amount of interest that you will have to pay on an investment on a home, car, or other type of big expense.
What will be the monthly amount to be paid if i take a loan of KD 1 million at 3.5 interest rate for 5 years?
That depends - on whether the interest is compound - or just on the original loan.
How do you calculate investment amount that compounds quarterly?
The quarterly compound interest of a principle can be given by A=P(1+(r/n))^.25t. Here P is the principle, A is the amount and t is the time taken.
Is simple or compound interest faster?
Calculation of simple interest is faster in comparison to compound interest. In the latter, interest is added up with the principal amount and interest is charged on that added amount in the next period calculation.
Concering compound interest as the amount of principal increase the amount of interest paid decreases?
false
How can I calculate the expected return on an investment?
To calculate the return on an investment you will fist write down the amount of your total investment including fees and any expenses. Next, write down your loss and finally calculate the return on investment by dividing the profit by total investment. www.moneychimp.com offers a compound interest calculator for your convenience.
