15 Percent Annual InterestDate: 8/24/96 at 0:1:51 From: Anonymous Subject: Formula for Compound Intrest I want to calculate the amount of money I will have in 29 years if I put $120 per month into an account that will earn 15 percent interest per year. I have a TI 83 calculator and I do not agree with the answer that I am getting. I believe that I must be doing something wrong. If you can supply a formula for this problem it would be greatly appreciated. Thank you, Jim Eastman Date: 8/25/96 at 15:54:45 From: Doctor Robert Subject: Re: Formula for Compound Intrest The answer, of course, depends on how often your interest is compounded. Since you keep adding to the principal, this is an annuity. The formula for the future value of an annuity is S = P((1+i)^n-1)/i where P is the amount invested each compounding period, i is the interest rate per period, and n is the number of periods. If your money is invested at 15 percent annually, then you have 29 compounding periods. n = 29, P = 12(120) and i = 0.15 (which seems pretty high). Mathematica says: 12.0*120.0*((1.15)^29 - 1)/0.15 = 543124. So S is approximately 543 thousand dollars. If the interest is compounded monthly then n = (29)(12), i = .15/12, and P = 120. Then S is approximately 714 thousand dollars. Does your TI-83 agree with these? -Doctors Robert and Ken, The Math Forum Check out our web site! http://mathforum.org/dr.math/ |
Search the Dr. Math Library: |
[Privacy Policy] [Terms of Use]
Ask Dr. Math^{TM}
© 1994-2015 The Math Forum
http://mathforum.org/dr.math/