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It is better to let a banking institution deal with this. This happened to my husband and his younger brother. The inheritance was held up because of Probate. Instead of loaning his brother the money out of his own pocket he and his younger brother went to the bank and produced the death certificate and a copy of the will to the bank and they loaned his brother the money (after he signed papers that what money they loaned him came out of the inheritance right off the top.) The bank compounds the interest rate. If you personally loan this family member the money then you may get stuck with paying it. Try doing the above and keep it between the family member and the bank. You need to establish 3 key points 1. The loan amount. 2. The interest rate. 3. The time agreed to repay you the loan. Let's say $100,000 at 5% and it must be paid back in 10 years. Without going into all the calculations (I'll post the link for you) The repayments would be $1060.67 per month for 10 years. http://www.anz.com/common/calculators/loanrepayment/exampleau.asp#profile
What else can I help you with?
Which compounding period has the highest effective rate of interest?
The compounding period with the highest effective rate of interest is continuous compounding. This is because interest is calculated and added to the principal at every possible moment, maximizing the amount of interest accrued over time. As a result, continuous compounding leads to a higher effective annual rate (EAR) compared to annual, semi-annual, quarterly, or monthly compounding periods. In essence, the more frequently interest is compounded, the higher the effective rate will be, with continuous compounding being the ultimate case.
How do you calculate annual percentage yield?
To calculate annual percentage yield (APY), you need to consider the interest rate and the frequency of compounding. The formula is: APY (1 (interest rate / number of compounding periods)) number of compounding periods - 1. This formula takes into account how often the interest is compounded within a year to give a more accurate representation of the annual return on an investment.
Compound Interest and Your Return?
Compound Interest and Your Return How interest is calculated can greatly affect your savings. The more often interest is compounded, or added to your account, the more you earn. This calculator demonstrates how compounding can affect your savings, and how interest on your interest really adds up!
What is the difference in the total amount of interest earned on a 1000 investment after 5 years with compounding interest quarterly versus compounding interest monthly in Activity 10.5?
The difference in the total amount of interest earned on a 1000 investment after 5 years with quarterly compounding interest versus monthly compounding interest in Activity 10.5 is due to the frequency of compounding. Quarterly compounding results in interest being calculated and added to the principal 4 times a year, while monthly compounding does so 12 times a year. This difference in compounding frequency affects the total interest earned over the 5-year period.
What is the difference between actuarial interest and simple interest?
Actuarial interest takes into account compounding over time, while simple interest does not consider compounding.
Where interest is compounded continuously?
I think most banks use daily compounding, but you could use the continuous compounding to approximate daily compounding and be off by less than 0.2%
Where is continuously compounded interest used?
I think most banks use daily compounding, but you could use the continuous compounding to approximate daily compounding and be off by less than 0.2%
How does the frequency of compounding interest impact the growth of savings?
The more frequent the compounding of interest, the faster your savings will grow. For example, daily compounding will result in faster growth compared to monthly or annual compounding since interest is being calculated more frequently. This is due to the effect of compounding on the earned interest, allowing it to generate additional interest over time.
What is better to have your interest compounded annually quarterly or daily?
Compounding interest more frequently results in a higher effective return on your investment. Therefore, daily compounding is better than quarterly or annually, as it allows interest to be calculated and added to the principal more often, leading to increased growth over time. The more frequently interest is compounded, the more interest will be earned on interest, maximizing your overall returns.
The concepts of simple interest and compound interest and how these affected the results of your investment exercise?
Simple interest (compounded once) Initial amount(1+interest rate) Compound Interest Initial amount(1+interest rate/number of times compounding)^number of times compounding per yr
How do you calculate the compound interest rate?
A= Principle amount(1+ (rate/# of compounded periods))(#of compounding periods x # of years)
Which compounding period has the highest effective rate of interest?
The compounding period with the highest effective rate of interest is continuous compounding. This is because interest is calculated and added to the principal at every possible moment, maximizing the amount of interest accrued over time. As a result, continuous compounding leads to a higher effective annual rate (EAR) compared to annual, semi-annual, quarterly, or monthly compounding periods. In essence, the more frequently interest is compounded, the higher the effective rate will be, with continuous compounding being the ultimate case.
Which is bigger compounded interest quarterly or compound interest monthly?
With the same rate of interest, monthly compounding is more than 3 times as large.The ratio of the logarithms of capital+interest is 3.
Is it better to have your interest compounded annually quarterly or daily Why?
Compounding interest more frequently, such as daily or quarterly, generally leads to a higher overall return compared to annual compounding. This is because interest is calculated and added to the principal more often, allowing your investment to grow faster. Therefore, if you have the choice, compounding daily is the most advantageous, as it maximizes the effects of interest on interest over time.
What Compounding frequency?
Compounding frequency refers to how often interest is calculated and added to the principal amount in an investment or loan. Common compounding frequencies include daily, monthly, quarterly, semi-annually, and annually. The more frequently interest is compounded, the higher the overall return or cost will be on the investment or loan.
How do you determine the rate for one month for compounded interest?
On monthly compounding, the monthly rate is one twelfth of the annual rate. Example if it is 6% annual, compounded monthly, that is 0.5% per month.
How many times will interest be added to the principle in 1 year if the interest is compounded quarterly?
If interest is compounded quarterly, it is added to the principal four times a year. This means that interest is calculated and added to the principal every three months, resulting in four compounding periods within a single year.
