Eric Nicholas K's answer to Jovan's Primary 3 Maths Singapore question.
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A "Primary 3" question.
The standard of primary 3 students must be "much better" today compared to years ago.
The standard of primary 3 students must be "much better" today compared to years ago.
Date Posted:
5 years ago
Why must add 1
It’s the formula. Without the 1, the answer is different and incorrect.
Note that P (r/100)^n is an incorrect way of obtaining the answer, which is not the same as P (1 + r/100)^n minus P.
Note that P (r/100)^n is an incorrect way of obtaining the answer, which is not the same as P (1 + r/100)^n minus P.
You place 2500 into the bank paying 15%.
At the end of the first year, new final sum is 115% x 2500 = 2875.
In the second year, the 15% acts on the new sum of 2875 (that’s how compound interest works).
At the end of the second year, new sum is 115% x 2875 = 3306.25.
After the second year, the 15% acts on the new sum of 3306.25.
At the end of the third year, new sum is 115% x 3306.25 = 3802.1875.
Total interest accumulated along the way is final sum - initial sum = 3802.1875 - 2500 = 1302.1875, which rounds off (to the nearest dollar) to 1302.
At the end of the first year, new final sum is 115% x 2500 = 2875.
In the second year, the 15% acts on the new sum of 2875 (that’s how compound interest works).
At the end of the second year, new sum is 115% x 2875 = 3306.25.
After the second year, the 15% acts on the new sum of 3306.25.
At the end of the third year, new sum is 115% x 3306.25 = 3802.1875.
Total interest accumulated along the way is final sum - initial sum = 3802.1875 - 2500 = 1302.1875, which rounds off (to the nearest dollar) to 1302.
Incorrect is
2500 x 0.15^3 = 8.4375
This is worse than having 15% interest for one year!
Does this make sense?
2500 x 0.15^3 = 8.4375
This is worse than having 15% interest for one year!
Does this make sense?
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