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logicandtruth

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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)n–1.

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 12⁄4 = 3% (per quarter).

According to the question the answer in book is I = 500(1.03)8–1 = £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 View attachment 6280

Any advice would be much appreciated

the formula to find compound interest is I = P (1 + R)n–1.

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 12⁄4 = 3% (per quarter).

According to the question the answer in book is I = 500(1.03)8–1 = £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 View attachment 6280

Any advice would be much appreciated