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Question 79156: This is an interest question. Person has #55 to invest at 3% accrued monthly. How much money will there be in the account for three months, six months and one year?
Answer by mathdoc314(58)   (Show Source):
You can put this solution on YOUR website!
I agree this is a very interesting question.
55 sheqels at 3% accrued monthly
I actually have had a lot of trouble in determining what this means
Is the annual rate 3% or is the interest rate actually 3% a month?
Also is the interest compounded?
Let's first say it's 3% a month and it's compounded (because I personally think compounding is way more exciting than accruing)
Then each month the amount is multiplied by 1.03.
There is a big question of how to handle the rounding of the figures.
Most currencies now go to .01
In real life your account balance would be multiplied by 1.03, then rounded, then multiplied by 1.03 again, then rounded again, then multiplied by 1.03 again, then rounded again
A man once stole money from a bank by rigging the computer program to give him the extra half a penny (on average) for each transaction. He set up an account whose name was ZZZ something. The program put the money into his account each month. Eventually the bank officials saw the account and got suspicious and caught him.
In math classes I guess what you do is this
Again, that is with 3% interest per month, which is something you could probably earn if you are a loan shark.
For ordinary people who are not a loan shark, a bank savings account might earn an annual rate of 3% per year. That translates to (3%/12) or 0.25% per month. Now here is what it would look like compounded
The last figure, 56.67, is a little over 3% of the original amount - small interest rates don't compound very rapidly at first.
However you may really just want accruing which is simpler
There are no exponents with simple accruing, just multiplying numbers
Let's do the monthly 3% rate again. Each 3 months you add 4.95 to the account, because there is no compounding of the interest in this case.
(I know the math but not the terminology really. You should know the terminology from your class or another reference.)
But if you meant a 3% annual rate then it looks like this.
Each 3 months you add 1/12 of 4.95 to your account which is
0.41 1/4 cents or 0.4125 quid (dollars, sheqels)
I hope that you find this one helpful.
The question that was intended depends on the context I think.
Some careful language is required to precisely state how an interest calculation is done.
There is an industry and legal jargon for banking, and then there is another set of assumptions for the kind of textbook you are using.
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