Sharp compet cs-2850a Operation Manual page 46

COMPOUND INTEREST
Calculate the new balance on a deposit which is compounded quarterly for 4 years as
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)
Where
EXAMPLE:
Then 6,150 (1.0125)
OPERATION
P = amount of deposit (principal)
i = interest rate per period
n = number of years × 4
If P = $6,150
i = 5% annum
n = 16 (4 years × 4)
DISPLAY
.05
4
1
1.05094533691
1.05094533691
1.10448610117
1.10448610117
1.21988954767
1.21988954767
6150
7,502.32071817
n
÷
4 periods = 0.0125
. =
16
. $7,502.32 (New Balance)
0.05
0.0125
0.0125
1.0125
1.0125
1.02515625
1.02515625
1 . 05094533691
1 . 05094533691 ×
1 . 05094533691 =
1 . 10448610117
1 . 10448610117 ×
1 . 10448610117 =
1 . 21988954767
1 . 21988954767 ×
7 , 502 . 32071817
44
PRINT
÷
0 . 05
4 . =
∗
0 . 0125
Quarterly int. rate
0 . 0125 +
1 . +
1 . 0125 ◊
(1 + i)
1 . 0125 ×
1 . 0125 =
∗
1 . 02515625
(1 + i)
1 . 02515625 ×
1 . 02515625 =
∗
(1 + i)
∗
(1 + i)
∗
(1 + i)
6 , 150 . =
∗
2
4
8
16