Question

Seeking your assistance for the online course that I'm taking.
Topic is interest...I'm given to understand that it is a form of simple interest but am not given an actual formula to follow.
I'm told that I have $875 in an acct. at rate of .7% interest each month and I'm asked to get the value after 2 months.
I tried the following:

875 [(1 + .007) x 2 ] believing it to be 875 times the 1 plus the int. rate x the 2 months (n), but I got the wrong answer.

The answer for this question is 887.29 according to the course material.

Can anyone provide me with a detailed explanation/formula

Answer 1

Simple Interest is given by the formula P*R*T / 100 where P is principal, r is rate, t is time.
Therefore, 875 * .7 * 2/100 = 12.25
Adding 12.25 to 875, the amount = 887.25, which should be the correct answer, not 887.29.

Answer 2

The course is looking for something about "n" in time as it is explained as follows, but I'm just not getting it

To find the total value of anything at the end of a number of years (n), multiply the original value by (1 + percentage of growth) n times.

Answer 3

Well then the interest is being compounded.
The formula for compound interest is ,
A = P (100+r/100)^n
where r is rate, p is principle, n is conversion periods(basically,time.)
A = 875 * 100.7/100 * 100.7/100 = 887.29

Answer 4

This is what they gave as an example, but I'm not "getting" the "1" that they're referring to
To find the total value of anything at the end of a number of years (n), multiply the original value by (1 + percentage of growth) n times.
An Example
Let's imagine that your home is worth $95,000. It is appreciating at a rate of 3% each year.

To determine its value at the end of 2 years, you can apply the formula above.

Since 1 = 100%, 1 + percentage of growth can be figured by adding 100% + the given percentage.

This percentage of growth (103%) is multiplied times the original value n times, which in this case is 2.
Value After 2 Years

Answer 5

Please forgive me for seeming so dense, but where are you getting the 100.7/100? The course mentions adding "1" to the rate, and then it changes to 1 = 100% as you can see in the explanation that they gave - I'm not gettingit....and then you divide the 100.7 by 100 and do this twice, so I am confused beyond measure.

Answer 6

What they mean by adding 1 to the rate is, 1 + r/100 since rate is expressed as a percentage. 1 + r/100 is simply equivalent to (100+r)/100 , and I did it twice because it was for 2 months, and {(100 + 0.7)/100}^2 is equal to multiplying 100.7/100 two times.

Answer 7

Thank you so much Spacemanifestation for your assistance - I was so upset as I couldn't find anything to help me online and I've been searching for hours. Your assistance has been invaluable and I thank you with all of my heart. *smile*

Answer 8

Are you able to advise me on how I would key something like this into my scientific calculator?

Answer 9

Firstly, you're welcome. The best way to plug it in would be to write the principal, then a multiplication sign, then in parentheses add 100+r/100 (do this calculation manually) and raise the parentheses to the exponent of time(n).

Answer 10

Do I use the x with the exponent 2 at the top? My calculator has an "n" above the EE key, but I cannot figure out how to use it...in case I had a problem that was say, for 3 months..then I couldn't use the x with the exponent 2...I looked at the booklet that came with the calculator but cannot find the "n" key described anywhere in the booklet. Also, it would take the 2nd key to access it. BTW, thanks so much for continuing to assist me. You have no idea how much this means to me as I'm so demoralized by "not getting it." I know that I should, but it is hard so many years after not doing math.

Answer 11

The x with the exponent on top is just if you want to raise it to the power 2 (i.e square it).
Look for a sign that looks like "^" this one. And again, you're welcome. Don't be demoralized. Keep trying. It'll be worth it. :)

Answer 12

I don't have the key that you're talking about "^" on my calculator. Jeepers! I just bought it too! Ooops! Guess I didn't get the right one - it's a Texs Instruments TI-30Xa and is said to be a Scientific Calculator with oodles of functions. Looks like I erred when purchasing it.

Answer 13

Use the EE key instead of the "^" key. It should work. :)

Answer 14

I'm going to give it a try...

Answer 15

Let me know if it works.

Answer 16

It's not working...this is what I keyed
875 x [(100 + .07)/100) then I hit the EE button and keyed in "2" but the answer that I got is: 1750. When I tried to use the "n" button, then Error appeared on the screen.

Answer 17

I'd suggest you try looking up something about your particular calculator online. Maybe a manual or something.

Answer 18

Okay...I'll do that...thanks for taking the time to reply and to assist me. Much appreciated. *Smile*