Class Notes 01

# Class Notes 01 - Math 105Q Class Notes 1 Preliminaries Be...

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Math 105Q Class Notes 1 Interest Periods Interest Per Year ( m ) Compounded 1 Annually 2 Semiannually 4 Quarterly 12 Monthly 52 Weekly 365 Daily i = r m , where i is the interest rate per period, r is the annual interest rate, and m is the number of periods per year. Example: Determine i and n in the following situations: 1. 12% interest compounded monthly for 2 years 2. 8% interest compounded quarterly for 5 years 3. 10% interest compounded semiannually for 20 years B n = B n - 1 + i · B n - 1 = (1 + i ) · B n - 1 , where B n is the current balance and B n - 1 is the balance from the previous period Example: Consider the following savings account passbook: Date 1/1/06 2/1/06 3/1/06 Deposit \$1,000.00 Withdrawal Interest \$5.00 \$5.03 Balance \$1,000.00 \$1,005.00 \$1,010.03 1. What annual interest is this bank paying? 2. Give the annual interest and balance on 4/1/06. Balance after n interest periods: F = (1 + i ) n · P , where P is the principal 1 Preliminaries: • Be sure, that you are familiar with my syllabus

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Class Notes 01 - Math 105Q Class Notes 1 Preliminaries Be...

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