Someone with financial mathematics expertise (particularly compund interest)

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03-17-2008, 12:12 AM

Seb

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Someone with financial mathematics expertise (particularly compund interest)

please take a look...? I have been asked to "Find the future value of $500 invested for a period of 4 years, at 10% p.a. compounded annually. This part I can understand:

$500(1.1)^4 = $732.05

But then it says: "What if the interest was compounded daily?"

Well, the way I tried to work this out is as follows:

500(1.1/365)^1460

Too which the calculator answers: "0"

Do I have the formula for daily compound interest wrong? Or is it that the calculator cannot compute the answer?

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