Thread View: aus.mathematics
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Started by Laurence
Sun, 26 Oct 2008 14:50
Interest rates
Author: Laurence
Date: Sun, 26 Oct 2008 14:50
Date: Sun, 26 Oct 2008 14:50
5 lines
884 bytes
884 bytes
Could someone tell me which produces the highest return? 6.1% compounded monthly or 8% compounded annually. Laurence
Re: Interest rates
Author: Ken Pledger
Date: Sun, 26 Oct 2008 20:20
Date: Sun, 26 Oct 2008 20:20
16 lines
2124 bytes
2124 bytes
In article <6mjat6Fh43agU1@mid.individual.net>,
"Laurence" <eireneus@xyahoox.com.au> wrote:
> Could someone tell me which produces the highest return?
>
> 6.1% compounded monthly or
> 8% compounded annually.
> Laurence
(1 + (0.061)/12)^12 = 1.0627...
so the first alternative amounts to roughly 6.3 % per annum. You'd
definitely do better to go for the second.
Ken Pledger.
Re: Interest rates
Author: Barb Knox
Date: Sun, 26 Oct 2008 20:23
Date: Sun, 26 Oct 2008 20:23
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In article <6mjat6Fh43agU1@mid.individual.net>,
"Laurence" <eireneus@xyahoox.com.au> wrote:
> Could someone tell me which produces the highest return?
>
> 6.1% compounded monthly or
> 8% compounded annually.
The latter (assuming that the 6.1% is the per-month rate * 12, i.e. the
"APR" in monthly-payment jargon).
The annual rate for an APR R compounded monthly is:
((1 + R/100/12)^12 - 1)*100
So an APR of 6.1 percent represents a true annual rate of about 6.27
percent.
> Laurence
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