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 May 16th, 2012, 12:10 PM #1 Newbie   Joined: May 2012 Posts: 6 Thanks: 0 Compound Interest Problems COMPOUND INTEREST PROBLEMS PLZ EXPLAIN ALSO AS I AM A BEGINNER Q1. The effective rate of interest corresponding to a normal rate 3% p.a. payable half yearly is….? Q2. A machine is depreciated at the rate of 20% on reducing balance.The original cost of the machine was Rs.100000 and its ultimate scrap value was Rs. 30000.The effective life of machine is……..? Q3. The population of a town increases every year by 2% of the population at the beginning of that year. The number of years by which the total increase of population be 40% is……? Q4. The difference between C.I. and S.I. on a certain sum of money invested for 3 years at 6% p.a. is Rs.110. The sum is….? Q5. A machine the useful life of which is estimated to be 10 years costs Rs.10000. Rate of depreciation is 10% p.a. The scrap value at the end of its life is ….? Q6.The effective rate of interest corresponding a nominal rate of 7% p.a. convertible quarterly is ……? Q7. The annual birth and death rates per 1000 are 39.4 and 19.4 respectively. The number of years in which the population will be doubled assuming there is no immigration or emigration is……?
May 16th, 2012, 09:14 PM   #2
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Re: Compound Interest Problems

Quote:
 Originally Posted by RishebhKumar PLZ EXPLAIN ALSO AS I AM A BEGINNER Q1. The effective rate of interest corresponding to a normal rate 3% p.a. payable half yearly is….?
1.015^2 - 1

You're a "beginner" at what? Do you attend math classes?

 May 16th, 2012, 09:36 PM #3 Senior Member   Joined: Apr 2011 From: USA Posts: 782 Thanks: 1 Re: Compound Interest Problems You have this tendency to come on with a whole set of problems all at once, and no attempt at any of them, and no attempt even after someone shows you how to start them, and are a "beginner" at all of them. You have to learn the concepts and then try to apply them to other problems. Eventually you have to "go it alone." (You never even returned and answered Mark when he wanted to see some attempt of you. You just wanted him to solve them for you.) Do you have any of the equations necessary to solve these problems and are just trying to figure out which ones to apply to what things? If you don't have them, and this is for school work, what are they expecting you to use? Did you follow what Denis did and know why he did it? Like let's start with this. Do you know why he took 3% and made 1.5% of it instead?
 May 21st, 2012, 12:03 PM #4 Newbie   Joined: May 2012 Posts: 6 Thanks: 0 Re: Compound Interest Problems Sorry for asking loads of questions, but I am preparing for govt. exam competitions and for this I want this to solve you as I have no idea about these questions where to start and what to do although I have done lots of questions therefore some questions don't click in my mind and I load it topicwise so that my whole sets of problem get finished topicwise...........Moreover, I am not a school or college student. I have completed those far before.... So even if you don't find me worthy of your help, it's ok, I won't mind..
 May 21st, 2012, 10:30 PM #5 Senior Member   Joined: Apr 2011 From: USA Posts: 782 Thanks: 1 Re: Compound Interest Problems Sigh. Look at my second paragraph. If I'd deemed you "not worthy" to work with, I wouldn't have been trying to ask you questions. Some of this is not really problems for "beginners." You need to have a basic underlying concept of how compounding works. While these are not all money related, a good place to start is by googling "time value of money" and try to read up on how that works, because it involves compounding effects. The math can be applied to anything that compounds. You need to understand some concepts and get the equations. If you sincerely want to learn this material, then you need to start back at the beginning learning the basics. What you are listing here is a bit of a mixed variety of different things and it would take a lot of explanation to go through each one of them if you don't understand the basics. (There's a couple I don't even know how to do.) The possible exception is #5, but I don't know your methods of depreciation. I'm assuming #2 means take 20% of the amount left over after you'd subtracted the prior 20%. But #5 doesn't say "reducing balance," so if that means it's just 10% of the original amount per year (and not on the reduced balance), then that should be pretty easy to figure out. If you take 10% away for 10 years, how much is left?
May 21st, 2012, 11:51 PM   #6
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Quote:
 Originally Posted by RishebhKumar I have no idea about these questions . . .
You need to know the compounding formula F = P(1 + i)^t, where F is the "final value" after t years (for yearly compounding) and P is the principal or "initial value". When the value is increasing, the variable i is the interest (or appreciation) rate, e.g. 0.06 if the annual rate is 6%. When the value is decreasing, the variable i is negative and represents the depreciation rate, e.g. -0.1 for 10% annual depreciation.

Can you use the above information to have a go at Q5 (which is easy) and attempt Q2 and Q3? If so, please post your working.

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# a machine is depreciated @ 20% on reducing balance. the original cost of machine was rs. 100000 and its ultimate scrap value was rs 30000. what will be the effective life of machine?

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