[mammuna]

Oh I finally got it. Thankyou for such a detailed and well written explanation.
I appreciate your help very much.
I will look into your lectures aswell.
Thanks again

[mammuna]

Thankyou for your reply. I appreciate you explaining it to me but I am still confused because in many questions available in book when interest rate is compounded monthly then the interest rate is divided by 12 , but when compounded every 3 months thes interest rate is not divided by 4. Hence the confusion as to why 2 separate treatment is shown in the book.
For example:
In the book its is given as an illustration that:

If the nominal interest rate was 10% per year compounded on a monthly basis then the formula used is
r=(1+i/n)^n -1
r =((1+0.1/12)^12 )-1 =0.1047 ×100= 10.47%

As above we are compounding every 12 months so why use a different formula when compounding quarterly?

Again I apologise that i am unable to understand whats the difference.
Thanks in advance.

[mammuna]

And below is an answer from the other tutors here on this website for the same question as but giving a different answer to you.
”
Ken Garrett
Keymaster
Topics: 10
Replies: 9641
?????
It’s an error and it should be:

(1 + 0.021/4)^4 – 1 = 0.021166 ”

I am so confused. Kindly help
Thankyou

[mammuna]

Hi
I am struggling with understanding the same question.
Why are different formulas used to calculate effective interest rate in other questions?

In some questions treatment is as below:
If the nominal interest rate was 10% per year compounded on a monthly basis then the formula used is
r=(1+i/n)^n -1
r =((1+0.1/12)^12 )-1 =0.1047 ×100= 10.47%

So why in above question we are using (1+r)^n -1

I am obviously missing something that sets these 2 examples apart to grant different treatment.

Any help will be much appreciated.

[mammuna]

thank you

[mammuna]

thanks very much for your help.
i am still a little bit confused .
because i thought that flexed budget -actual cost= variance due to price/usage or efficiency?
and total material/labour/cost variance = budget-actual
just confused as thats what is mentioned in the book yet some example flex the budget while some do not.

[mammuna]

thanks very much

[mammuna]

hi
i have written the question as it is in the book .
how would you solve this question if you ignore what it says as the answer in the book ?

[mammuna]

thank you very much for your help
i understand now .
so if total time paid is x= 100%
and time worked is 80% of x= 2400
2400=80% of x
so 2400/80 = 1% of x
30= 1% of x
x= 3000
hours paid is 30000
thanks

[mammuna]

ok . thanks for looking anyway 🙂

[mammuna]

thanks so much for the help 🙂

[mammuna]

it would still be the the same entry in control account or a ledger account,would nt it ?
so confused.

[Author]

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