Compound interest with more than one period per year

 If you deposit $5000 into an account paying 6% annual interest compounded monthly, how  long until

there is $8000 in the account? 

0.06 12¿ n ¿
8000=5000(1+0.06( ¿¿
12

8000=5000 ¿

1.6=¿

log(1.6)=12n(log 1.005)

log 1.6
=12n
log 1.005

n=7.9

Plug in the giving information, F = 8000, P = 5000, r =  0.06, and m = 12. Use the order or operations
to simplify the problem. Keep  as many decimals as possible until the final step.  Divide each side by
5000. Take the logarithm of each side. Then use Property 5 to  rewrite the problem as multiplication.
Divide each side by log 1.005. 94.23553232 ≈ 12t  Use a calculator to find log 1.6 divided by log 1.005. t ≈
7.9  Finish solving the problem by dividing each side by 12  and round your final answer. It will take
approximately 7.9 years for the account to go from $5000 to $8000.

Effective Interest Rate

Find the effective rate of interest corresponding to a nominal rate of 9% per year compounded semi
annually.

r m
EIR=(1+ ¿ -1
m

.09 2
EIR=(1+ ¿ -1
2

EIR=9.2%

Continuous Compounding

Question 1: An amount of Rs. 2340.00 is deposited in a bank paying an annual interest rate of 3.1%,
compounded continuously. Find the balance after 3 years.

Solution:
Use the continuous compound interest formula,

Given P = 2340

r = (3.1 / 100) = 0.031

n=3

Use the continuous compound interest formula,

A = Pern

Given,

P = 2340

r = 3.1 = (3.1 / 100) = 0.031

t=3

Here: e stands for the Napier’s number, which is approximately 2.7183.

However, one does not have to plug this value in the formula, as the calculator has a built-in key for e.
Therefore,

A = 2340 e0.031(3) ≈ 2568.06

So, the balance after 3 years is approximately Rs. 2,568.06.

Discount

A certain amount of money is invested. The ROR is equal to 10% compounded quarterly. What is the
rate of discount in percent?

d = (EIR/(EIR    + 1)) x 100%

EIR = (1 + r/m)m  - 1

EIR = (1 + 0.10/4)4  - 1

EIR = 0.1038

d = (0.1038/(1.1038)) x 100%

d = 9.4 %
References;

https://byjus.com/continuous-compound-interest-formula/

https://math.usu.edu/~koebbe/online_math_1100/lesson_examples/section4.2/problem39.pdf

https://www.mesacc.edu/~scotz47781/mat120/notes/compound_interest/compound_interest_intro.p
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