G’day…
How’s ya Maths?
This is an easy one [}
]Wetapac and ANZ couln’t solve it without massive computer hours. I can do it on my little calculator….in 15 steps..just want to see how clever this Forum actually is?
You must show your workings/calculations. No scientific calculators/excell spread sherets permitted. Ordinary calculator is okay.
^^^^^^^^^^^^^^^^^^^^^^^^^^^
If “Which Bank” offered you the chance to Deposit $???? Exactly to 2 decimal places,in return for $2,000,000(within 2cents) , in 15 years time and paid you 10.4% compound interest.How much must you Bank with them today ?
Not a trick Question.
Answer at Midnight.21/10/2003
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]Hi Bill
I would try Westpac, they seem as good as any.
Regards
G’day Muppet…
minus 10 points for that answer [
!]Try again
Bill
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]Assuming that the interst is compounded annually.
Annual Interest = 1.105
After 15 years CV(15) (Current Value 15th period) = $2,000,000
CV(14) = CV(15)/Interest = 2,000,000/1.105 = 1,809,954.75
Repeat 14 more times.(ie CV(x) = CV(x+1)/Int)
Answer $453,412.92
Dino
“If you don’t know where you are going, every road will take you there.”
G’day Dino…
I know who you are Dino, and I expeced you to get it right…. right track, BUT I said compounded so no need to assume. Now, as always, READ the question and try and get it right this time[
!]You get a minus 6… cause I expected better from you…stuff up again and ya gotta go back to the dot game.
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]Let me have a go….
I thought DinoWeb was correct but luckily saw your answer.
The following assumes interest is compounded ANNUALLY at the end of every 12 months. Nothing mentioned about when it compounds.
D = deposit
D x (1+0.104)^15 = 2,000,000 + D
4.410990281D = 2000000 + D
3.410990281D = 2000000
D = 586339.99This $586,339.99 is deposited.
You get $2,000,000 back and your deposited $586,339.99 deposit still remains. Nothing mentioned about getting your deposit back only a return of $2,000,000.
ta da!!!!
Hi Bill
you can use this formula
A = P(1+i)^n
P = beginning amount,
i = interest (annual rate of increase)
n = years invested
A = end amountSo working backwards
2,000,000 = P (1+0.104)^15
2,000,000 = P (1.104)^15
2,000,000 = P(4.410990281)
2,000,000 / 4.410990281= P
P = 453412.92
btw I found the formula here
http://mcs.edgewood.edu/math/post101/compound_fun.htm#solutions
I didn’t know how to do it without excel myself [
]In five days on this forum I’ve proved twice that I didn’t understand a problem as well as I thought.[
]Like my signature says, “If you don’t know where you are going…..”
I hate it when people tell me I’m wrong, particularly when I thought I was so clever and had it right.[
!]Put my pride away, and think about things more, not just jump in when an “obvious” answer presents itself.
Guess that’s why I was never real good at chess.[
]Dino
“If you don’t know where you are going, every road will take you there.”
don’t worry DinoWeb I didn’t know either so I looked for the answer. I have learnt (now) to look at a problem from every angle before jumping in well maybe not for too long or that would be procrastinating [
]I reckon it’s $453412.92.
This is how I got there:
year 15 $2000000
year 14 $2000000.00/1.104 = $1811594.20
year 13 $1811594.20/1.104 = $1640936.78
year 12 $1640936.78/1.104 = $1486355.78
year 11 $1486355.78/1.104 = $1346336.75
year 10 $1346336.75/1.104 = $1219507.93
year 9 $1219507.93/1.104 = $1104626.75
year 8 $1104626.75/1.104 = $1000567.71
year 7 $1000567.71/1.104 = $906311.33
year 6 $906311.33/1.104 = $820934.17
year 5 $820934.17/1.104 = $743599.80
year 4 $743599.80/1.104 = $673550.54
year 3 $673550.54/1.104 = $610100.13
year 2 $610100.13/1.104 = $552626.93
year 1 $552626.93/1.104 = $500567.87
year 0 $500567.87/1.104 = $453412.92Rod.
ROD C is the winner..[
]2000000/1.104 and do it 15 times on a $3 calculator. Guess what…to check your answer you only gotta multiply $453,412.92 by 1.104 and you get 2 million bucks.
That was an easy one…I’ll think of a hard one next time.[}
]Most of you made it so complicated…or had 2-3 goes at it, aaand made a total balls up
Buggered if I know …but Muppet definetly came a poor last….”try Westpac” [:0)]
Hot Rod was not much better…an extra $100,000??
Dino might have had it but typed in 1.105
Camviv got the right answer….but complicated it.
I’ll teach you yet Cameron
Gotta work…
Cheers and thanks for a bit o fun.
Bill
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]Hi Bill
Weeell you did ask “Which Bank” so I suggested one.
Regards
just wondering Bill,
what bank is Wetapac?
Ha Ha
[
] Powmow[]Hi Bill,
I liked that one. Sure beats chasing fish on a computer screen. I see you clued in the answer with “15 steps on the calculator”. Very clever. Stupid me, couldn’t work out how to calculate it backwards just by dividing the interest rate.
If you indexed the figure with an averaged inflation rate to arrive at similar buying power as today, would you simply use the difference between the two for your calculation?
Regards, Phil
ROD C is the winner..thanks Bill,
it actually took me a lot longer to type it into the post than to do the actual calculation.
Rod. [
]Bill
I think we need to give Muppet his points back. I’m guessing that New Zealand never got the ‘Which Bank’ advertising slogan (if at all) half as much as us!!
muppet, when we say ‘Which Bank’ we mean CBA.
Cheers
MelNow I’m upset.
I got the answer right, but just typed the interest rate wrong in my post.Grrrr![
!][!][!]Funny thing is, I lost more marks in school for exactly the same thing than I could ever count. (With my hand writing, it is sometimes easy to mistake 4’s for 9’s etc).
That’s why I use a computer today, and never do maths on paper.
Still, the maths is correct even if the numbers aren’t.
Dino
“If you don’t know where you are going, every road will take you there.”
Hi Dino,
I was wondering how you got the right answer with the wrong interest rate!
Rod.
]Wetapac and ANZ couln’t solve it without massive computer hours. I can do it on my little calculator….in 15 steps..just want to see how clever this Forum actually is?
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