Sharp QS-2770H User Manual
Page 50
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COMPOUND INTEREST
Calculate the new balance on a deposit which is compounded quarterly for 4 years at a
given annual interest rate.
SOLUTION: 1. Calculate the quarterly interest rate.
2. Calculate the new balance (principal plus interest).
FORMULA:
New balance = P (1
+
i)
n
Where
P = amount of deposit (principal)
i
= interest rate per period
n = number of years
× 4
EXAMPLE:
If
P = $6,150
i
= 5% annum
÷
4 periods = 0.0125
n = 16 (4 years
× 4)
Then 6,150 (1.0125)
16
.
=. $7,502.32 (New Balance)
(QS-2760H/2770H):
OPERATION
DISPLAY
.05
0.05
0.05
÷
Annual int. rate
4
4. =
0.0125
Quarterly int. rate
0.0125
0.0125
0.0125
+
1
1.0125
1.
+
1.0125
◊ (1
+
i)
1.0125
1.0125
×
1.0125 =
1.02515625
(1
+
i)
2
1.02515625
1.02515625
1.02515625
×
1.02515625 =
1.05094533691
(1
+
i)
4
1.05094533691
1.05094533691
1.05094533691
×
1.05094533691 =
1.10448610117
(1
+
i)
8
1.10448610117
1.10448610117
1.10448610117
×
1.10448610117 =
1.21988954767
(1
+
i)
16
1.21988954767
1.21988954767
1.21988954767
×
6150
6,150. = Principal
7,502.32071817
New Balance
7,502.32071817