8 responses

  1. biglildan
    November 24, 2010

    100 * (1 + r/4)^8 = 2609

    Solve for r to get a rate of 2.01 = 201% p.a.

    I don’t think i read the question right.

    I’m lookin properly at it now. You want deposits added at the start of every month correct?

    If that’s the case you’re solving an equation such as:

    (1 + r/4)^8 + … + (1 + r/4)^1 = 26.09

    Not sure how you solve that one…

    Just checked: someone else agreed with me, good luck
    solving that without a computer

    Check this out:
    http://en.allexperts.com/q/Basic-Math-657/Compound-Interest-Rate.htm

  2. krishna
    November 24, 2010

    Hey I think Biglildan is correct.

  3. SIDDHANTH C
    November 24, 2010

    i= 100
    n=2yrs
    r=?
    a= 2609
    p= 2609 – 100 = 2509

    i = p*n*r
    100
    100 = 2509*2*r
    100
    100*100=2509*2
    r= 1.99282583

  4. hustolemyname
    November 24, 2010

    monthly instalments compounded quarterly sounds very strange. its easier to work with a monthly interest rate, and then adjust using 1+quarterly = (1+monthly)^3

    let g = 1+r where r = monthly interest rate
    assuming deposits at the start of each month
    your first 100 accumulates to 100 g^24
    … you last 100 accumulates to 100 g^1
    so you have 100 g ( 1 + g + .. + g^23) = 100 g (g^24-1) / (g-1)
    which should be 2609
    so 100 (g^25 – g) = 2609 (g-1)
    or g^25 – 27.09g +26.09 = 0

    You cant solve this algebraically, but you can do it by successive approximation or other numerical methods.

  5. panneerselvam s
    November 24, 2010

    R=100/PN N = 8*8+1

  6. Pranil
    November 24, 2010

    The general formula for compound interest is
    A = P[1 + (R/100)]^N when interest is calculated yearly basis
    In the above case the interest is calculated quarterly therefor the effective rate is r = R/4
    and the effective period = 2 × 4 = 8
    Principle = 100 × 24 = 2400
    2609 = 2400 [1 + (R/400)]^8
    or 2609/2400 = [1 + (R/100)]^N
    1.0871 = [1 + (R/100)]^N
    1.010493879 = [1 + (R/400)]
    1.010493879 – 1 = (R/400)]
    or 0.010494 = R/400
    R = 0.010494 × 400 = 4.1976 = 4.2 %

  7. Rob
    November 24, 2010

    The following website will provide you the exact answer you are looking for, just insert the values that you know. I started by entering an assumed interest rate of 2.5 % and finally ended with an actual value of 3.95% by incrementing it by 0.1 or 0.05 etc. Assuning that you started with 100 and deposited 100 thereafter every month for two years and your final value was 2609.

    Hope this helps.

    http://www.debtrelief.com.au/int-calc.php

  8. valivety v
    November 24, 2010

    Hi,

    I have master degree in mathematics and I have got thirteen ten years of teaching experience in Math at college level and currently I am working as a lecturer for an army engineering college author of math guide
    contact me for solution .
    thankyou

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