My Math Forum A simple Interest question...or not ?!?

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 November 2nd, 2011, 11:40 AM #11 Newbie   Joined: Nov 2011 Posts: 7 Thanks: 0 Re: A simple Interest question...or not ?!? Okay, I'm going to chew on your explanation for a bit. I think I get it and yes I understand the formulas and calculations for the basic PV and FV questions and also performing compound interest calculations. But I struggle with things if they stray too far from the basic formulas. It's been years since I've done math and I'm having to relearn a few things. E.g. How to rearrange a formala to solve for its various unknowns. Thanks so much. I might come back if I'm still not getting it. This forum is really inspiring.
 November 2nd, 2011, 11:42 AM #12 Newbie   Joined: Nov 2011 Posts: 7 Thanks: 0 Re: A simple Interest question...or not ?!? Denis, that is correct. You assement of the question is accurate.
November 2nd, 2011, 11:47 AM   #13
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Re: A simple Interest question...or not ?!?

Quote:
 Originally Posted by lkpegger Okay, I'm going to chew on your explanation for a bit. I think I get it and yes I understand the formulas and calculations for the basic PV and FV questions and also performing compound interest calculations. But I struggle with things if they stray too far from the basic formulas.
Heh. I have the opposite problem: I don't know almost anything about finance. I can solve any equation of this sort and have good intuition as to what needs to be done to solve a problem, but the terminology of the field and the standard formulas are unknown to me.

 November 2nd, 2011, 06:36 PM #14 Math Team   Joined: Oct 2011 From: Ottawa Ontario, Canada Posts: 14,597 Thanks: 1039 Re: A simple Interest question...or not ?!? Ok, here's what you need to do; I'll let you figure out why the formulas work! Step 1 ; get T (1st year's tuition expense): T = 3000(1.04)^5 = 3649.96 Step 2 ; get A (amount required to permit tuition for 4 years): Let K = 1.04 / 1.06 A = [TK(1.04^3) / (1.06^4) - T / 1.06] / (K - 1) = 13388.50 Step 3 ; get D (required annual deposit to accumulate to A): D = .06A / (1.06^5 - 1) = 2375.07 (using annual instead of monthly cause I'm lazy!) The account will look like this: Code: 0 .00 1 2,375.07 .00 2,375.07 2 2,375.07 142.50 4,892.64 3 2,375.07 293.56 7,561.27 4 2,375.07 453.69 10,390.03 5 2,375.07 623.40 13,388.50 6 -3,649.96 803.31 10,541.85 7 -3,795.95 632.51 7,378.41 8 -3,947.80 442.70 3,873.31 9 -4,105.71 232.40 .00 You're welcome

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