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 #1
avatar+118723 
+5

This is a very good question and really confuses a lot of students.

 

The compound interest formula is     

$$FV=P(1+r)^n$$

FV stands for future value and P stands for principal - that is how much you start with.

 

When you are introduced to this in year nine you are told that r is your interest rate and n is the time.

This is true BUT  the interest rate is stated as an annual interest rate and the time is stated in years so kids often get it cemented into their brains that  r is the (annual) rate and n is the time (years).  This is WRONG!

 

r is the interest rate for the compounding period of time.

and

n is the number of compounding time periods.

 

SO     if the interest is 6% per annum compounding quarterly and the money is invested for 2 years then

the interest is compunded 4 times every year so each time it must be a quarter of 6%      

$$r=\frac{6\%}{4}=\frac{0.06}{4}=0.015$$

and

the interest is compounded 4 times a year for 2 years so that is 

$$n=4*2 = 8$$     compounding periods

 

sorry I just read your question better. If it were compounding monthly then r=6%/12  and n=2*12

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Sometimes different letters are used - but this is always the idea behind it.

sometimes the formual is written like this

$$PV=P(1+\frac{r}{t})^{n*t}$$

 

Where r is the annual rate, n is the number of years and t is the number of compounding periods each year.

but it really is the same.   (although n and r stand for the yearly figures not the compounding period figures)

Apr 6, 2015
 #4
avatar+118723 
+20

Thanks Anon,  

My instructions for reposting were followed to the T so I am going to give some time to your question.

REPOST:   http://web2.0calc.com/questions/why-no-explanation-i-wasn-t-the-one-who-posted-this-twice

Alan has already give the answer only version so  that will help me know if my  answers are correct.  Thanks Alan.

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PLEASE NOTE THAT I HAVE DONE IT A MUCH SHORTER WAY IN THE NEXT POST.  

Pat writes all the 7-digit numbers in which all the digits are different and each digit is greater than the one to its right (so the tens digit is greater than the units, the hundreds greater than the tens, and so on). For example, 9,865,320 is one of the numbers that Pat writes down.

(a) How many numbers does Pat write down?

First I will look at all those beginning in 9

9 8 7 6 5 4 3                 Ends in 3     5 middle digits 0 digits can be left out               5C0=1

9                   2              Ends in 2     6 middle digits any 1 digit must be left out        6C1=6

9                      1           Ends in 1      7 middle digits any 2 digit must be left out       7C2=21

9                          0       Ends in 0       8 middle digits any 3 digit must be left out      8C3=56

Now look at those starting with 8

8 7 6 5 4 3 2                 Ends in 2     5 middle digits 0 digits can be left out                5C0=1

8                   1              Ends in 1     6 middle digits any 1 digit must be left out         6C1=6

8                      0           Ends in 0      7 middle digits any 2 digit must be left out        7C2=21

Now look at those starting with 7

 7 6 5 4 3 2 1                Ends in 1     5 middle digits 0 digits can be left out                5C0=1

7                   0              Ends in 0     6 middle digits any 1 digit must be left out         6C1=6

Now look at those starting with 6

6 5 4 3 2 1  0              Ends in 0     5 middle digits 0 digits can be left out                  5C0=1

 

$${\mathtt{1}}{\mathtt{\,\small\textbf+\,}}{\mathtt{6}}{\mathtt{\,\small\textbf+\,}}{\mathtt{21}}{\mathtt{\,\small\textbf+\,}}{\mathtt{56}}{\mathtt{\,\small\textbf+\,}}{\mathtt{1}}{\mathtt{\,\small\textbf+\,}}{\mathtt{6}}{\mathtt{\,\small\textbf+\,}}{\mathtt{21}}{\mathtt{\,\small\textbf+\,}}{\mathtt{1}}{\mathtt{\,\small\textbf+\,}}{\mathtt{6}}{\mathtt{\,\small\textbf+\,}}{\mathtt{1}} = {\mathtt{120}}$$

I agree with Alan, I must be a genious!     

 

(b) One of Pat's numbers is chosen at random. What is the probability that the tens digit is a 1?

Mmm

9 -  -  -  - 10    (8,7,6,5,4,3,2 ) 3 out of the 7 will be missing       7C3 = 35

8 -  -  -  - 10    (7,6,5,4,3,2)     2 out of the 6 will be missing       6C2 = 15

7 -  -  -  - 10     (6,5,4,3,2)       1 out of the 5 will be missing       5C1 =  5

6 5 4 3 2 1 0                             0 out of the 4 will be missing       4C0 = 1

$${\mathtt{35}}{\mathtt{\,\small\textbf+\,}}{\mathtt{15}}{\mathtt{\,\small\textbf+\,}}{\mathtt{5}}{\mathtt{\,\small\textbf+\,}}{\mathtt{1}} = {\mathtt{56}}$$    

56 of the numbers will have a 1 in the 10s column.

 

P(1 in the 10s column) = $${\frac{{\mathtt{56}}}{{\mathtt{120}}}} = {\frac{{\mathtt{7}}}{{\mathtt{15}}}} = {\mathtt{0.466\: \!666\: \!666\: \!666\: \!666\: \!7}}$$

WOW that the same as Alan got too - I'm on a roll.    

 

(c) One of Pat's numbers is chosen at random. What is the probability that the middle (thousands) digit is a 5?

NOTE:  I have put the 5 in the MIDDLE which is the 10,000 place

_ _ _ 5 _ _ _

9,8,7,6     leave out 1 of these     4C1= 4 ways

4,3,2,1,0   leave out 2 of these    5C2 = 10 ways

4*10 = 40 ways that 5 can be in the middle

P(5 is in the middle) = $${\frac{{\mathtt{40}}}{{\mathtt{120}}}} = {\frac{{\mathtt{1}}}{{\mathtt{3}}}} = {\mathtt{0.333\: \!333\: \!333\: \!333\: \!333\: \!3}}$$

 

This one does not agree with Alan.    Maybe I am not so clever after all.   

 

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I am thinking that I may have made this question longer than necessary.

I might try and make the working shorter in another post.   

Apr 6, 2015
 #2
avatar
+5
Apr 6, 2015

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