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There's a bank advertising a 12% savings account, but the condition is that you have to place a certain amount in the account every month for a year, after which you can withdraw your savings.
If, for example, I put £100 a month into the account then in January, the first instalment, I would be earning 12% for the full twelve months. But the February instalment is only earning 12% for 11 months, and the March instalment for only 10 months, - so at the end of the year you haven't really earned 12% interest on all the money you have put in there. I'd have put in £1,200 (12 x £100) but how much interest would I actually have earned, in percentage terms?
Please can you let me know, and also let me know the calculation that you used to get there? My maths isn't that hot !

2007-01-03 21:08:49 · 5 answers · asked by gorgeousfluffpot 5 in Business & Finance Investing

5 answers

Your actual interest rate accross the board works out to 6.5 percent. Still not bad these days, but i think hardly worth all the restrictions. 6.5 percent, probably will get ate up by inflation and taxes anyway. basically you need to do better than inflation and taxes to really make any money.

2007-01-03 21:13:31 · answer #1 · answered by tootall1121 7 · 0 0

You can use the compound interest table. But before this you have to calculate the monthly interest payment which can be taken as 12/12=1%.
Now the problem is that of an Annuity. Look into the annuity table for 1, 1% for 12 periods.
It will work out to 100xFVIFA,1,12 meaning 100 is mulitplied by the Future Value Interest Factor of an Annuity. This will give a number say X.
Now your annual interest or effective interest rate is (X-1200)/1200 x 100 percent.
I don't have an interest table with me so please refer it in the Library or from behind any Financial Management Book or you can get a Compound Interest Table from the Book Store.

2007-01-04 04:00:25 · answer #2 · answered by Mathew C 5 · 1 0

you're watching 2 diverse cultures that have diverse values for money. whilst one subculture espouses saving in spite of marketplace tendencies for interest, the different subculture caters to debt without regard to cost or effects interior the long term era. i assume what it boils right down to is priorities. One subculture lives for the destiny (Japan), the different subculture lives for the now (u . s . a .). I desire the jap subculture with this regard.

2016-12-12 03:27:29 · answer #3 · answered by ? 4 · 0 0

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2007-01-04 00:47:08 · answer #4 · answered by Anonymous · 0 0

I know a company currently offering 24% Yearly.

You also need to keep the money for at least a year.

There are also 6 month and 3 month investments. (All of them offer more than 12% Yearly)

You don't need to place money every month.

If you need more detailed FREE information then drop me a line.

2007-01-04 10:26:11 · answer #5 · answered by Anonymous · 0 3

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