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Compound Interest for JC 2008: Is finding the number of years out of scope?

  • 27-04-2008 9:52am
    #1
    ircoha
    Closed Accounts Posts: 2,290 ✭✭✭


    Going through the stuff on this with the young lad now.
    I did my JC in '68 :)

    AFAIK

    The basic formula is
    A = P(1+r)**n

    Where A = amount = P +I where I = total interest paid for the period
    P = principal
    r is interest rate (annual i believe is the only option at JC level)
    **n where n is number of years and ** is to the power of on this keyboard.

    The simple questions are where P,r,n are given
    the next level is

    when I, r, n are given and find P

    P = I/(((1+r)**n)-1)

    or given A,P n, find r

    r = sqr(A/P) - 1

    However is find n in scope if given A,P, R

    Thanks


Comments

  • #2
    Delphi91
    Registered Users, Registered Users 2 Posts: 1,501 ✭✭✭Delphi91


    ircoha,

    For JC at higher and ordinary level, the formula is not required. In terms of a calculation, they could be asked to calculate the interest added for at most 3 years.

    In last summers HL P1, they asked:
    What sum of money invested at 2% per annum compound interest
    would produce interest of €306·04 after three years?

    Have a look at copies of Paper 1 in your son's exam papers - that should help.


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