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Hi Sir,
In the examples with the $150,000 and $1,500,000.
Why when we are calculating the interest lost on investment do we add the $150,000 to the $1,500,000 and then devide by 2?
I understand the logic to $1,500,000/2 but not adding the amount needed?
Could you perhaps explain please, apologies if this is rather simple but I need to understand in order to better understand.
Thank you. Chris
On the very first day they sell 150,000 of investments and are losing interest on it.
By the end they have sold 1,500,000 of investments and are losing interest on the total.
The amount on which they are losing interest is gradually increasing from 150 to 1500 and therefore they are effectively losing interest for the whole year on the average amount.
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