
Economics Economics Forum  Financial Mathematics, Econometrics, Operations Research, Mathematical Finance, Computational Finance 
 LinkBack  Thread Tools  Display Modes 
August 9th, 2014, 06:00 AM  #1 
Senior Member Joined: Nov 2010 From: Indonesia Posts: 2,001 Thanks: 132 Math Focus: Trigonometry  Another Question about Compound Interest
Starting from May, $\displaystyle 1^{st}$ 2012 and so on in the early days of the month, Jaya Abadi company will give donation to an orphanage as much as 3,600,000.00 IDR. The orphanage wants the donation to be received at once in May, $\displaystyle 1^{st}$ 2012, and the bank agrees and gives 6% of compound interest per year. The amount of money received is: A. 56,400,000.00 IDR B. 59,784,000.00 IDR C. 60,000,000.00 IDR D. 60,216,000.00 IDR E. 63,600,000.00 IDR Is it possible to get that much in one day (notice there's no change of date)? Or did they just make a typo? 
August 9th, 2014, 03:09 PM  #2 
Senior Member Joined: May 2008 Posts: 299 Thanks: 81 
Perpetuity problem. Answer is C. 3,600,000/.06 Google it up. Wiki it up. 
August 9th, 2014, 08:06 PM  #3 
Senior Member Joined: Nov 2010 From: Indonesia Posts: 2,001 Thanks: 132 Math Focus: Trigonometry 
OK, thanks for your help. 
August 9th, 2014, 08:31 PM  #4 
Senior Member Joined: Nov 2010 From: Indonesia Posts: 2,001 Thanks: 132 Math Focus: Trigonometry 
Wait, I Googled it up and encountered this page: https://www0.gsb.columbia.edu/premba...ce/s5/s5_4.cfm Then I got confused. Is the one applied here the Present Value of NoGrowth Perpetuities or Present Value of a Perpetuity Due. I couldn't digest which one fit more to the question, not to mention that someone else I asked answered E instead, which means that he assumed that it is Present Value of a Perpetuity Due. Your answer means that you assumed it is Present Value of NoGrowth Perpetuities. Which one is correct? 
August 10th, 2014, 04:27 AM  #5  
Senior Member Joined: May 2008 Posts: 299 Thanks: 81  Quote:
Your friend is right. It is inded a case of the "Present Value of a Perpetuity Due". Accordingly, we'd have 3600000+3600000/.06  
August 10th, 2014, 06:41 AM  #6 
Senior Member Joined: Nov 2010 From: Indonesia Posts: 2,001 Thanks: 132 Math Focus: Trigonometry 
That's good. Glad finally I can confirm it before I go to the office again. Thanks for the confirmation.

August 10th, 2014, 06:52 AM  #7 
Senior Member Joined: May 2008 Posts: 299 Thanks: 81 
By the way, what currency is IDR?

August 10th, 2014, 02:28 PM  #8 
Senior Member Joined: Nov 2010 From: Indonesia Posts: 2,001 Thanks: 132 Math Focus: Trigonometry 
IDR is short for "Indonesian Rupiah". Rupiah is the currency used in Indonesia, my country. Though I wrote 63,600,000.00 IDR, for example, our country's writing format is Rp 63.600.000,00 instead.


Tags 
compound, interest, question 
Thread Tools  
Display Modes  

Similar Threads  
Thread  Thread Starter  Forum  Replies  Last Post 
[Compound Interest] The Question is a bit Ambiguous?  Monox D. IFly  Economics  2  August 9th, 2014 08:08 PM 
Simple interest/Compound interest  Qwertyqwerty  Elementary Math  2  September 20th, 2011 10:41 PM 
Compound Interest Question help please!  ProJO  Algebra  3  April 3rd, 2011 09:09 PM 
Compound Interest  grainne  Elementary Math  4  January 5th, 2010 01:16 PM 
Compound Interest Question help please!  ProJO  Calculus  1  December 31st, 1969 04:00 PM 