In: Finance
Lets Assumed 3.90% of interest rate is Annual Saving Bank
Account Interest Rate,
Deposited Amt on Starting date Is $10,000/-,
Interest Compounding daily Basis is i.e.3.90%,
Maturity Amount will be $ 21,000/-,
Then Found Out How Many Year(?) required under daily basis
compounding of Interest....
Formula For Calculation of Growth Of Amount :-
A = P (1 + r/n)nt
where A = Growth Of Amount
P = Principle
Invested
r = Interest
Rate
n = No.Of Compounding
Annually or Say Conversions
t = times (in
years)
now we Put figure into formula,
$21,000 = $10,000(1+3.90/360)(360*t)
Time Duration, Solve for t based on Log Table,
t = ln(A/P) / n[ln(1 + r/n)] = [ ln(A) - ln(P)
] / n[ln(1 + r/n)]
= In($21000/$10000) / 360[In(1 + 3.90/360]
= [In($21000) - In($10000)] / 360[In(1+3.90/365]
= 19.03 Years (Appx 19.00 Years)
(Note : Interest Compounded dailly Basis means Added At the end
of each day & 360 days into 1 Year)
[Reconciliation for Understanding Only:-
A= $10,000(1+3.90/360)(360*19.03) = $21,004.04]