compound interest

nakabar · Post by **nakabar** » Thu Oct 01, 2009 8:56 pm

please could someone help me how to work out 1.06 to the power of 100.
Question is Harry's father put 1p into a bank account that pays interest of 6%. How much would he have after 100 years.
We applied the formula
Principal x (1 + 6/100) to the power of 100 but are stuck. Help.

Post by **hermanmunster** » Thu Oct 01, 2009 10:30 pm

Not sure what facilities you have for doing this ? Is it meant to be on a calculator???

I use a spreadsheet :

1
1.06
cell above * 1.06 = 1.12
cell above * 1.06 = 1.19

anyway copying it down to 100 cells, gets the grand sum of Â£3.20 ish

WP · Post by WP » Fri Oct 02, 2009 11:45 am

Assuming this is a calculator question, 1.06 to the power 100 is right: I get Â£3.39. (Herman's figure is for 99 years.)

Then again, maybe it's a trick question and the answer is 1p because they round to the nearest penny each year.

Post by **hermanmunster** » Fri Oct 02, 2009 11:54 am

just think if I'd left it another year i'd have got another 19p...

SunlampVexesEel · Post by **SunlampVexesEel** » Fri Oct 02, 2009 12:23 pm

On a simple, you get it free from the petrol station, calculator this is tricky.

On a slightly more functional calculator you should have a x^y button.

i.e. One number to the power of the other.

Incidentally, Google will do this for you...
Search for:

(1+0.06)^100=

Or if you are old fashioned... take logs, multiply by the 100 and then inverse logs!

Regards
SVE

PS

After 100 years the money in his bank will have increased by compound interest but this will possibly buy less due to inflation; I would recommend spreading his investment!

Maybe some inflation linked saving product!!

ian35mm · Post by **ian35mm** » Fri Oct 02, 2009 1:13 pm

And buying a half-decent clculator.

Casio fx-83ES will set you back about Â£7 and is good to KS4 (and above in any other subject than maths).

mike1880 · Post by **mike1880** » Fri Oct 02, 2009 2:36 pm

Got our son's calculator from Tesco for Â£2 - wildly over complicated for Y7 and will probably break before KS4 but the simple one cost Â£4...

SunlampVexesEel · Post by **SunlampVexesEel** » Fri Oct 02, 2009 2:50 pm

DD has a fx85ES as this was the one recommended at school. The policy was get an fx83ES or fx85ES if you want to be helped using your calculator. The fx85ES is a fx83ES with a solar cell.

Being keen on gadgets, when I bought DD's, I paid a few Â£ more to get myself a Casio fx-991ES which has some extra functions which I'm sure I will probably never use.

Regards
SVE

Post by **hermanmunster** » Fri Oct 02, 2009 4:20 pm

.... log tables..... what memories!

Milla · Post by **Milla** » Fri Oct 02, 2009 4:50 pm

ah, I used to enjoy log tables. Very satisfying.