Compound Interest - Sharp EL-738 Notes

By manipulating
we get
and
Substituting the values, we get
The time under consideration is 1,25 years, that is, 15 months.
Key in as
( 1 − 0.1025 ÷ 0.1176 )
The answer is 1,25, that is, 15 months.
3.2.3

Compound interest

We use our financial keys to do the calculations because there is only one exponent in the
formula:
NB: The interest rate must be entered into the calculator as a percentage and
NOT as a decimal because the calculator has been preprogrammed to automat-
ically divide the interest rate by a hundred. Remember that it is convention to
enter either the present value or future value as a negative amount.
• Calculate the future value if R5 000 is invested for five years at 15% per year com-
pounded monthly.
CHAPTER 3. FINANCIAL CALCULATOR MODE
S = P (1 + rt) and P = S (1 − dt)
r =
t = 1 −
1 −
t =
= 1,25.
÷ 0.1025 =
tm
j
m
S = P 1 +
m
S = P (1 + r)
24
d
1 − dt
d
÷ d.
r
0,1025
÷ 0,1025
0,1176
t
or S = P (1 + r)
t