if r=0.00875 and n=180
formula is (1+r)^n
further (1 + 0.00875)^180 and the answer
is 4.797761, then how the 4.797761 get in simple calculator
2 Answers
well you need to do 1.00875 x 1.00875 x 1.00875 x 1.00875 x 1.00875….. so there are 18 1.00875s… its pretty time consuming, you’re better off using a scientific calculator.
If you don’t have one, you can always use one online:
In the days before calculators, they used logarithms:
y = (1.00875)^180
log (y) = log [ (1.00875)^180 ]
log (y) = 180 log (1.00875)
using log tables, they’d find that log (1.00875) = 0.003784
Then multiply that by 180:
log (y) = 180 (0.003784)
log (y) = 0.681039
then using log tables, again, to find the inverse log:
10^(log (y) ) = 10^(0.681039)
y = 4.797761
You lose accuracy with log tables, because their precision is usually to 4 decimal places (more with interpolation, but you’d lose accuracy with that too).