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compound interest rates

zerocold · 2010-06-21 22:18:34

Hi, I am new here and not sure if this is in the right section; i hope it is. I am a bit confused about compound interest rates and apy. For example: an account compounds daily and is credited monthly. I begin with 8,400 $ and the interest rate is 1.35 1.35% of 8400 is about 113 (correct?) Therefore, if interest is…

Comments

Milarky Posts: 6,356 Forumite

24 June 2010 at 5:59PM

xrjtg wrote: »

Forgive me for adding to the record that you're assuming that the continuous rate is 1.

Not so, I said the 'base' (e) raised to the 'time fraction' (eg. EXP[4% x 3 months/12 months] = EXP[0.01] etc) - which is necessarily a variable quantity. The base, however, remains 'constant'. (Apologies for just introducing a term like that and relying on the context to make that apparent.)

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