Page 71 - CalcBus_Flipbook

CH 8] Calculating Business 8-13

(a) 1. Factor the exponent completely 30 = 2 x 15 = 2 x 3 x 5
2. 0.06 ÷ 365 = 0.0001644
3. 1 + 0.0001644 = 1.0001644
4. CL 1.0001644 X = X = = X = = = = 1.0049433

power 2 power 3 power 5

CL .06 ÷ 365 + 1 X = X = = X = = = = X 3000 = 3,014.8298

Exponent Power 2 3 4
= key strikes (n-1 =) (2-1=) 1 (2-1=) 1 (5-1=) 4

5. 1.0049433 x 3,000 = 3,014.8299 = $3,014.83

The calculated value 3,014.8299 when rounded for dollars becomes $3,014.83.

(b) The compound interest daily for 30 days is ($3,014.83 — $3,000 =) $14.83
For comparative purposes, notice that the exact interest on $3,000 at 6% for 30 days is
$3,000 x 6% x 30/365 = $14.79, which is 4¢ smaller than the compound interest of $14.83.

Using an MS EXCEL spreadsheet to calculate daily interest values
This same problem can also be set up and solved on an MS EXCEL spreadsheet, and
when saved to your computer it can be accessed at will to solve problems. Of course the
assumption is that you are already familiar with the EXCEL spreadsheet that comes with
Microsoft Office suite. However, if you are not familiar with the EXCEL spreadsheet then do
sign yourself up to take and complete a course where you learn to use this powerful
business tool.

1. Launch your Microsoft Excel® spreadsheet program. Assign labels in column A, rows 1-
6, for Principal, Interest Rate, Interest Rate Periods, Number of Years, Number of Days
in year, and Compound Interest Balance. You can expand the cell by clicking on the
right line of the column number, A, B, C, etcetera. (Arrows will then show that you can
manipulate.) These labels are for your reference only.

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2. Enter the details for your specific calculation in Column B, rows 1 – 5, to coincide with
the labels. Principal is $3,000, Interest rate is 0.06, Interest Rate Periods is 30, Number
of years is 1, and Number of Days in year is 365. Leave cell B6 (Compound Interest

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