Junior Cert Honours Maths - Compound Interest Info please....

DarkDusk

Hi,
I came across this formula for compound interest:
M = P( 1 + i )^n
Where:
M is the final amount including the principal.
P is the principal amount.
i is the rate of interest per year.
n is the number of years invested.

And of course it works. Does anyone know can this be used in an exam for answering the compound interest questions?? (And to get full marks)

Thanks,
James.

Indiego

DarkDusk wrote: »

Hi,
I came across this formula for compound interest:
M = P( 1 + i )^n
Where:
M is the final amount including the principal.
P is the principal amount.
i is the rate of interest per year.
n is the number of years invested.

And of course it works. Does anyone know can this be used in an exam for answering the compound interest questions?? (And to get full marks)

Thanks,
James.

I use that for the compound interest questions, i cant fathom how people can do some of the questions without using it, especially the ones where they tell you the final amount, the years it was invested for and the rate, and you have to find the prinicpal for the first year... those questions suck XD

Desire.

Is it in the log tables?

DarkDusk

Indiego wrote: »

I use that for the compound interest questions, i cant fathom how people can do some of the questions without using it, especially the ones where they tell you the final amount, the years it was invested for and the rate, and you have to find the prinicpal for the first year... those questions suck XD

Have you used it in tests/mock and got full marks?

Slow Show

I've never even heard of that formula before, but using alternate methods and coming up with a right answer is fine in Maths. For example, my teacher gave us an alternative formula for finding the slope of a line that's not in the log tables or my maths book but I used it for the mocks and got full marks. The question doesn't say what method to use, just to find the answer, therefore they can't really dock you marks for it. In fact, it'd be very wrong if they did. And I am learning that, thanks! :pac:

yellowsky169

I've always used to "P,I,A" system as it seems to work for all questions but I think the formula is fine too as long as you know when and how to use it...:D

ScummyMan

Yep, that formula works, and is in the log tables, but it only works if the amount invested doesnt change, ie you cant use it if they take out or put in money.

Works grand backwords though, like Indiego i find it much easier for those questions.

Jackobyte

Indiego wrote: »

I use that for the compound interest questions, i cant fathom how people can do some of the questions without using it, especially the ones where they tell you the final amount, the years it was invested for and the rate, and you have to find the prinicpal for the first year... those questions suck XD

I never heard of that formula. I was taught a different way. What I did was:

An Example.

Question:
A sum of money was invested for 4 years at rates of 7% year one, 9% year two, 11% year three and 10% year four. The final value of the investment was €17,210. What principal was invested?

My solution:
End of year 4 = 17210 = 110% of end of year 3. (year 3 + 10%) (divide by 110, multiply by 100 to find end of year 3 / 100%)
Therefore end of year 3 = 15645.4545 = 111% of end of year 2.
Therefore end of year 2 = 14095.0041 = 109% of end of year 1.
Therefore end of year 1 = 12931.1964 = 107% of start of year 1.
Therefore start of year 1 = 12085.2303 = Principal Invested


*maths may be wrong because it is 2 in the morning but you get the gist.

ciara95

Saw that formula in my log book today and was wondering could I use it. Guess I can:) thanks guys!