Math Problem.... I dare you to try! - TriStateTuners.com :: Home of Tristate Auto Enthusiast

cmr076 · 03-26-2008, 10:18 AM

so im finishing up a take home test thats due at 1pm today for a consumer math class and im getting totally ****ed up on a problem. Someone pwease help me...

Problem) if a $20,000 investment has an annual rate of return of 10%, and is compounded quarterly, what is the value of the investment in 25 years.

when working it out i was using the equation:

A=P(1+r/n)^(n)(t)

A = ammount
P = principal invested
r = annual rate of interest
n = # of compounding periods per year
t = time in years (of investment)
^ = to the power of (obviously)

the answer i ended up with was $236,280.00 what im getting stuck on is i am pretty sure that [annual rate of return] is not the same as [r], or annual rate of interest.

any help would be much appreciated!

Nick 95 6sp · 03-26-2008, 10:37 AM

I got $236,274.33 ...so your answer is right within "rounding off" limits of calculators, if you used more significant figures you'd see my answer. I used an online "future value calculator" ...if you google that term you'll see a bunch. The annual rate of interest is the same as the annual rate of return.

Any rewards for this? Cheesesteak? Beer? Hug & kiss?

cmr076 · 03-26-2008, 10:41 AM

ill paypal you three dollars and fifty cents (you cover paypal fees

)

*** so an annual rate of return of 10% can be substituted for the [r] or annual interest rate? i guess that makes sence!

oh and if you wanna come to montco ill treat ya to lunch haha!

thewake · 03-26-2008, 03:26 PM

Quote:

Originally Posted by cmr076

so im finishing up a take home test thats due at 1pm today for a consumer math class and im getting totally ****ed up on a problem. Someone pwease help me...

Problem) if a $20,000 investment has an annual rate of return of 10%, and is compounded quarterly, what is the value of the investment in 25 years.

when working it out i was using the equation:

A=P(1+r/n)^(n)(t)

A = ammount
P = principal invested
r = annual rate of interest
n = # of compounding periods per year
t = time in years (of investment)
^ = to the power of (obviously)

the answer i ended up with was $236,280.00 what im getting stuck on is i am pretty sure that [annual rate of return] is not the same as [r], or annual rate of interest.

any help would be much appreciated!

You should have gotten $53,700

A = $20,000 * (1 + 10% per year / 4 quarters per year) ^ (10 years *4 quarters per year)
A = $20,000 * (1 + 2.5% per quarter) ^ 40 quarters
A = $20,000 * (1 + 0.025) ^ 40
A = $20,000 * 1.025 ^ 40
A = $20,000 * 2.685
A = $53,700

With a little help from Excel, you can calculate by quarter easily enough (10 years is 40 quarters)

Q1 20500.00
Q2 21012.50
Q3 21537.81
Q4 22076.26
Q5 22628.16
Q6 23193.87
Q7 23773.72
Q8 24368.06
Q9 24977.26
Q10 25601.69
Q11 26241.73
Q12 26897.78
Q13 27570.22
Q14 28259.48
Q15 28965.96
Q16 29690.11
Q17 30432.37
Q18 31193.17
Q19 31973.00
Q20 32772.33
Q21 33591.64
Q22 34431.43
Q23 35292.21
Q24 36174.52
Q25 37078.88
Q26 38005.85
Q27 38956.00
Q28 39929.90
Q29 40928.15
Q30 41951.35
Q31 43000.14
Q32 44075.14
Q33 45177.02
Q34 46306.44
Q35 47464.10
Q36 48650.71
Q37 49866.97
Q38 51113.65
Q39 52391.49
Q40 53701.28

WhiteXFire · 03-26-2008, 03:42 PM

^That would be helpful if it was 10 years instead of 25.

Nick already answered it correctly.

SpEcRv9 · 03-26-2008, 03:48 PM

Quote:

Originally Posted by WhiteXFire

^That would be helpful if it was 10 years instead of 25.

Nick already answered it correctly.

womp womp. all that time for nothing.

pearl · 03-26-2008, 03:54 PM

seven.

but seriously, good luck.

redline · 03-26-2008, 03:59 PM

Well as far as I see it I would have enough money to throw one hell of a party!

P.S. When did they start adding letters to math??????

Nick 95 6sp · 03-26-2008, 04:32 PM

Quote:

Originally Posted by WhiteXFire

^That would be helpful if it was 10 years instead of 25.

Nick already answered it correctly.

As an engineer, I can understand where thewake is coming from. Who's to say what 25 years is exactly. Is it 24.9 years or 25.2 years? If you think of it as 25 years +/- 15 years, then thewake is also correct.

WhiteXFire · 03-26-2008, 04:56 PM

Quote:

Originally Posted by Nick 95 6sp

As an engineer, I can understand where thewake is coming from. Who's to say what 25 years is exactly. Is it 24.9 years or 25.2 years? If you think of it as 25 years +/- 15 years, then thewake is also correct.

Or if we're only using 1 significant digit...

cmr076 · 03-26-2008, 09:21 PM

ill let you all know on tuesday what the answer was, thanks for all the input!

deb38 · 03-26-2008, 10:23 PM

Don't you have a financial calculator? It's easy to do with a fin. calc.

WhiteXFire · 03-26-2008, 10:25 PM

Why do you need a financial calculator? It's easy to do with any calculator...hell, just type the numbers into google.

Blkmax · 03-27-2008, 07:02 PM

yeah, i got the same thing as Nick...

The formula for that question is: A= P(1+(r/m))^n

If you put that in a calculator A=20000(1+(.10/4))^100 = 236274.33

thewake · 03-28-2008, 09:50 AM

Quote:

Originally Posted by WhiteXFire

^That would be helpful if it was 10 years instead of 25.

Nick already answered it correctly.

I misread it. I Did the math quickly with the windows calc and had a different answer, so I tried to be helpful.

02rex · 04-01-2008, 11:01 AM

Quote:

Originally Posted by redline

Well as far as I see it I would have enough money to throw one hell of a party!

P.S. When did they start adding letters to math??????

hahahaha

03-26-2008, 10:18 AM	#1
cmr076 Tri-State Post Whore Join Date: Aug 2006 Location: blue bell/gwynedd valley, PA Member #2319 My Ride: S4 iTrader: (8)	Math Problem.... I dare you to try! so im finishing up a take home test thats due at 1pm today for a consumer math class and im getting totally ****ed up on a problem. Someone pwease help me... Problem) if a $20,000 investment has an annual rate of return of 10%, and is compounded quarterly, what is the value of the investment in 25 years. when working it out i was using the equation: A=P(1+r/n)^(n)(t) A = ammount P = principal invested r = annual rate of interest n = # of compounding periods per year t = time in years (of investment) ^ = to the power of (obviously) the answer i ended up with was $236,280.00 what im getting stuck on is i am pretty sure that [annual rate of return] is not the same as [r], or annual rate of interest. any help would be much appreciated! __________________ 135 ├┼┼╕ 246R

03-26-2008, 10:37 AM	#2
Nick 95 6sp Tri-State Post Whore Join Date: Feb 2007 Location: Narberth, PA Member #3675 My Ride: '95 Supra Turbo 6sp iTrader: (0)	I got $236,274.33 ...so your answer is right within "rounding off" limits of calculators, if you used more significant figures you'd see my answer. I used an online "future value calculator" ...if you google that term you'll see a bunch. The annual rate of interest is the same as the annual rate of return. Any rewards for this? Cheesesteak? Beer? Hug & kiss? __________________ Nick '95 6sp Supra Twin GT2860's w/TiAL exhaust housings, 2X TiAL WG's and BOV's, on V-band moded HKS twin manifolds, AEM v2, FJO w/NTK, AEM meth/water spray, GSC S1 cams, OS Giken triple clutch and Super Lock LSD, Racelogic

03-26-2008, 10:41 AM	#3
cmr076 Tri-State Post Whore Join Date: Aug 2006 Location: blue bell/gwynedd valley, PA Member #2319 My Ride: S4 iTrader: (8)	ill paypal you three dollars and fifty cents (you cover paypal fees ) *** so an annual rate of return of 10% can be substituted for the [r] or annual interest rate? i guess that makes sence! oh and if you wanna come to montco ill treat ya to lunch haha! __________________ 135 ├┼┼╕ 246R

03-26-2008, 03:42 PM	#5
WhiteXFire Tri-State Post Whore Join Date: Apr 2005 Location: Langhorne, PA Member #305 My Ride: 2007 Infiniti G35x, 2008 MB SLK55 AMG iTrader: (0)	^That would be helpful if it was 10 years instead of 25. Nick already answered it correctly. __________________ Just enjoying the ride. To view links or images in signatures your post count must be 10 or greater. You currently have 0 signatures. 2004 Chrysler Crossfire - Gone 2007 Infiniti G35x Sedan - To view links or images in signatures your post count must be 10 or greater. You currently have 0 signatures. 2008 Mercedes-Benz SLK55 AMG - To view links or images in signatures your post count must be 10 or greater. You currently have 0 signatures.

03-26-2008, 03:54 PM	#7
pearl Tri-State Post Whore Join Date: Nov 2005 Location: NEW JERSEY Member #1108 My Ride: suck it trebek iTrader: (0)	seven. but seriously, good luck. __________________ Last Activity: 03-24-2009 12:05 PM

03-26-2008, 03:59 PM	#8
redline Tri-State Post Whore Join Date: Aug 2005 Location: Kaiserslautern, Germany Member #784 iTrader: (1)	Well as far as I see it I would have enough money to throw one hell of a party! P.S. When did they start adding letters to math?????? __________________ 2006 Evo 9 Special Edition

03-26-2008, 09:21 PM	#11
cmr076 Tri-State Post Whore Join Date: Aug 2006 Location: blue bell/gwynedd valley, PA Member #2319 My Ride: S4 iTrader: (8)	ill let you all know on tuesday what the answer was, thanks for all the input! __________________ 135 ├┼┼╕ 246R

03-26-2008, 10:23 PM	#12
deb38 Tri-State Addict Join Date: Jun 2007 Location: Manayunk PA Member #5266 My Ride: 2001 Audi S4 iTrader: (0)	Don't you have a financial calculator? It's easy to do with a fin. calc. __________________ Older Setup - Custom Tuned Stage 3 S4 Old Setup - Built 2.7 Single S366 Turbo New Setup - RS6's, Meth, Dumps. Sitting on Jack Stands To view links or images in signatures your post count must be 10 or greater. You currently have 0 signatures.

03-26-2008, 10:25 PM	#13
WhiteXFire Tri-State Post Whore Join Date: Apr 2005 Location: Langhorne, PA Member #305 My Ride: 2007 Infiniti G35x, 2008 MB SLK55 AMG iTrader: (0)	Why do you need a financial calculator? It's easy to do with any calculator...hell, just type the numbers into google. __________________ Just enjoying the ride. To view links or images in signatures your post count must be 10 or greater. You currently have 0 signatures. 2004 Chrysler Crossfire - Gone 2007 Infiniti G35x Sedan - To view links or images in signatures your post count must be 10 or greater. You currently have 0 signatures. 2008 Mercedes-Benz SLK55 AMG - To view links or images in signatures your post count must be 10 or greater. You currently have 0 signatures.

03-27-2008, 07:02 PM	#14
Blkmax Tri-State Addict Join Date: Feb 2006 Location: PA Member #1465 My Ride: Official Pace Car iTrader: (0)	yeah, i got the same thing as Nick... The formula for that question is: A= P(1+(r/m))^n If you put that in a calculator A=20000(1+(.10/4))^100 = 236274.33

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