Maths query.

Vita · 6 Oct 2012 at 13:15

Hi,

I'm not the brightest when it comes to maths so I thought I'd practice with percentages. This one question, is bugging the daylights out of me. I can not even get to the answer, despite knowing the answer!

If Sheila deposited $1,050.00 into a saving account at her local bank.If the interest rate is 1.5%,then how much will she have after 18 months round the answer to the nearest cent?

Answer is $1,073.63

How do I work this out!

GravyMonster · 6 Oct 2012 at 13:18

Assuming it's 1.5% per year, 18 months interest = 2.25% pro rated.

Therefore, 1050 * 1.0225 = 1073.625

SlyReaper · 6 Oct 2012 at 13:18

I make it $1065.75, which is $1050x(1+(1.5/100))

Remember interest gets paid annually, so after 18 months, she'd only have 1 year's worth of interest.

TNGL · 6 Oct 2012 at 13:19

edit, my method gets $1073.71...

muon · 6 Oct 2012 at 13:19

Spunkey said:
Assuming it's 1.5% per year, 18 months interest = 2.25% pro rated.

Therefore, 1050 * 1.0225 = 1073.625

That's wrong as you earn interest on the interest.

GravyMonster · 6 Oct 2012 at 13:21

muon said:
That's wrong as you earn interest on the interest.

In the real world, yes. But in terms of this question it seems to fit.

IRL it'd be +1.5% after 12 months, then + .75% after 6 months, giving 1073.74.

Reaper 392 · 6 Oct 2012 at 13:21

I know how to work it out but I don't get the right answer. interest is paid once a year so the answer should be 1050 * 1.015, but that gets the wrong answer ($1065.75). Assuming you get half the interest for keeping the money in their for half the time you get 1065.75*1.0075, which is $1073.74

are they suggesting she gets compound interest monthly or twice a year that is equivalent to 1.5% a year or something?

justalex81 · 6 Oct 2012 at 13:23

i worked it out this way:

1050.00/100 = 10.5

10.5 x 1.5 = 15.75

15.75 x 1.5 = 23.625

23.625 + 1050.00 = 1073.625

Dis86 · 6 Oct 2012 at 13:26

You'd need to know how often the interest gets added. As yes, as people have stipulated it would be subject to compound interest.

Vita · 6 Oct 2012 at 13:27

Spunkey said:
Assuming it's 1.5% per year, 18 months interest = 2.25% pro rated.

Therefore, 1050 * 1.0225 = 1073.625

Thank you so much! I worked out the yearly interest and the interest for 6 months. I just couldn't work out the formula, I kept * by 2.25

Now I understand much better. Thanks to everyone else for their replies.

estebanrey · 6 Oct 2012 at 13:47

I did it this way (ignoring the fact interest compounds)

$1050 x 1.015 = $1065.75 (total after 12 months)

$1065.75 - $1050 = $15.75 (yearly interest gained)

Half of $15.75 is $7.865 (6 monthly interest gained)

$1050 + $15.75 + $7.865 = $1073.625 (or $1073.63 rounded)

dowie · 6 Oct 2012 at 15:06

Reaper 392 said:
I know how to work it out but I don't get the right answer. interest is paid once a year

the question doesn't specify when the interest is paid (and the pay schedule isn't relevant anyway - if you've held a deposit for 18 months then you've accumulated 18 moths worth of interest so far).

Its just a simple interest calculation that ignores compounding

minister · 6 Oct 2012 at 15:25

Vita said:
Hi,

I'm not the brightest when it comes to maths so I thought I'd practice with percentages. This one question, is bugging the daylights out of me. I can not even get to the answer, despite knowing the answer!

If Sheila deposited $1,050.00 into a saving account at her local bank.If the interest rate is 1.5%,then how much will she have after 18 months round the answer to the nearest cent?

Answer is $1,073.63

How do I work this out!

compound then its 1050(1+.015/12)^18=1073.87
or $1,050e^.015*1.5=1073.89
without Compounding
.015*1.5*1050+1050= 1073.625
or (.015*1050)+(.0075*1050)+1050=1073.625
However the question is misleading.

ripped · 6 Oct 2012 at 16:22

1,050.00*(1.015)^1.5