Hi new to the forum and would like to improve my level of maths. I am working through a text but need some help with a compound interest question.
the formula to find compound interest is I = P (1 + R)n1.
P= principal sum
R= interest rate
n= number of periods for which interest is calculated
John borrows £500 over 2 years from a building society at a rate of 12% per annum compounded
quarterly. How much interest will Shifty have to pay at the end of the 2-year loan?
If £500 is loaned for 2 years at a rate of 12% per annum, compounded quarterly, the
calculations need to be made on a quarterly basis. So the value of n will be 4 (quarters) × 2 (years)
= 8, and the value of r will be 12â4 = 3% (per quarter).
According to the question the answer in book is I = 500(1.03)81 = £133.38.
Now my issue is when i try to do this with my calculator i get the figure 614.9
I am not sure what I am doing wrong. There are other practice questions, but I want to be sure I am following the correct stages on the calculator before I attempt these. I am using this calculator model
Any advice would be much appreciated