Simple Interest, Compound Interest – ACCA Management Accounting (MA)
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from the figure 1.2682, how did you derive that the interest per for the whole year was $26.82?
Multiplying something by 1.2682 is the same as adding on 0.2682 of the amount, and multiplying by 0.2682 is the same as multiplying by 26.82%.
Sir, thankyou very much for starting with the logics behind each thing ! Thats the best thing about you !
Sir, in our institute, we are thought to use the following formula to convert a nominal interest rate to an effective interest rate:
r= (1+i/n)^n – 1
where r = effective interest rate
i= nominal interest rate
n = number of periods.
Using this other formula I am getting a different answer to the one you are getting to calculate for Example no.4
And I dont even understand the logic of the above formula.
Please help.
It is the same formula. The question gives the interest as 2% per month, and so the annual rate is (1.02^12) – 1
Had the question said that the nominal interest was 24% per year, then you would have divided 24% by 12 to get the monthly rate of 2%.
Thankyou for the logic !
You are welcome 馃檪
Hi John, I just wanted to say thank you so much for all your hard work. I’m back studying after finishing college over 16 years ago and your lectures are so on point they bring me right back to my college days. I thought I would struggle to remember but you explain so well in a number of lectures what took a year to learn in college. Thank you to you and your team!
Very informative and easy to follow lecture. Thank you
Thank you for your comment 馃檪
I didnt understand how we get 1.10 in compound interest. Is it the calculation of interests of the 1st two years?
If you are referring to example 2 in the lecture notes, then the question states that the rate of interest is 10% per year. Multiplying by 1.10 is the same as adding on 10%.
(I do assume that you downloaded the free lecture notes before watching the lecture?)
Yes sir. Thank you very much!
You are welcome 馃檪
Hi I noticed that from Chapter 22 to 30 the lecture notes and the lecture video links are being mixed up.
On the lecture note Chapter 22 is Measure of Average and Dispension, however the lecture video for Chapter 22 is about Interest.
Hope opentuition can make the amendment. Thanks
It is because Chapters 22 and 23 are new chapters on topics that have been added to the syllabus for exams from September 2019 onwards. If you are taking the exams this month then ignore these chapters.
Lectures on these two chapters will be uploaded later this week.
Thank you sir, That’s a pretty interesting and useful lesson!!!!!!!!!!!
I hope one day that my classmates can watch lectures on Opentuition without using VPN!!!!!!!!!!!!!!
Thank you for your comment 馃檪
Where does the 26.82 come from? I am confused. It’s clear till the total amount after one year which is $126.82, but after that, I did not understand the calculation for APR
He said we gotta deduct the 1.2682 (the monthly interest) with 1 (from the formula i think) which will be 0.2682 multiply by 100 then 26.82% for the annual rate
As 1+R(annual rate) equals to (1+r)12 months which then 1+R=1.2682, we can just deduct 1-1.2682 in order to calculate the annual rate that symbolized as R = 0.2682 then multiply by 100 to find out the percentage 26.82%