Business Math - Finance Math (5 of 30) Compound Interest - Daily Compounding

[@nicolasdecicilia9195]

He is the best. Pandemic was like a darwinian selector for guys like Michel. Great youtubers like him got the attention deserved. I follow him since 2014, and always thought why he had not more subscribers

[@MichelvanBiezen]

Thank you. Glad we were able to help people during the lockdowns.

[@KozmoDyne]

Thank you. This was helpful, and much easier and to the point than many others.

[@Dietitionist.official]

Δ right

[@emililie2244]

Year has 360 days and month bank has 30 banking is a banking convention. Thanks for the effort, I seem very useful to me. Especially physics courses

[@MichelvanBiezen]

It depends on the type of account.

[@ricardohernandez5944]

2:38 such a beautiful golden ratio there!!

[@BelindaNsiah]

I feel so happy about your teaching

[@MichelvanBiezen]

Glad you like our videos. 🙂

[@nataliaaaron2279]

Just found this video❤❤thanks for this explanation ❤❤ Watching from guyana🇬🇾🇬🇾🇬🇾

[@MichelvanBiezen]

Welcome to the channel!

[@myhumorbad9286]

Thank you very much! I'm from Philippines!

[@MichelvanBiezen]

Welcome to the channel!

[@Klalapr]

could you please specify how do you do the calculations at least on the board so people see how you do the calculations. i cannot understand your add up 1 definition i cannot guess what you mean.

[@rizz.boy47]

Basically, it takes a while to find what a percent of a certain number is and then add it, so what they are doing is just making it over 100%, because you are gaining money not losing it, so if you have 20 % interest and you put in 100 $, you do not multiply 0.20x100 because you are losing money, but if you have 1.20xx100, you are gaining money the way you are supposed to, and it saves you lots of time, because you would have to add the actual value to the principle and that takes forever on a test.

[@joud261]

Can you solve this example sir Find the interest on $800 at 7.5% annually, compounded daily for 28 days The answer is 4.62 (compounded interest) HOW!! And what is the formula ?

[@MichelvanBiezen]

Yes when you use the equation in the video I = P(1+0.075/365)^28 - P = 804.6155 - 800 = 4.6155 = 4.62 (to the nearest cent)

[@joud261]

Ohh okay i got it But why didn’t we put 28 /365 and just 28

[@MichelvanBiezen]

because the exponent is: 365 x t = 365 x (28/365) = 28

[@joud261]

Thank you sir so much Do you have a telegram account Because i have a couple more questions

[@MichelvanBiezen]

The best way is to ask questions like you did here. We respond as time permits.

[@fy-g01abayaperla.99]

Hi! I have a question, I don't really know what to use as the days. Should it be 365 or 360 days?

[@MichelvanBiezen]

There are 365 days in a year (unless it is a leap year).

[@klentalupit]

If you want to compute "ordinary simple/compound interest" use 360 days. Otherwise, if you want to compute "exact simple/compound interest" use 365 days.

[@kevinb.3656]

How would you calculate what you earned daily? Lets say the APY of 10k compounded daily for 1 year is 10,100.50, how would i figure out how much interest i am being paid daily? I figured dividing the APY (10,100.50) by 365 would do it, but that calculates to about 27 bucks, which wouldnt makes sense since 27*365 would be a lot more than 100.50 dollars. So i figured i had to divide by 365 times the hours in a day, and that made more sense, but i am not sure if that is how it should be calculated. Thanks in advance.

[@MichelvanBiezen]

Daily interest = $100.50 / 365 = $ 0.275 / day

[@kevinb.3656]

@@MichelvanBiezen Gotcha, thank you.

[@ludo3911]

Now, if we deposit $500/month to that principal. How the formula change?

[@MichelvanBiezen]

Then it sounds like an annuity. Take a look at those videos. We have several examples.

[@rizz.boy47]

There is a key at the top of the video

[@chaewon3744]

Awesome lesson sir! But is it necessary to use a calculator with business math? This is gonna come out in my college entrance test but i heard calculators weren’t allowed so i’m having doubts...

[@MichelvanBiezen]

There are many problems that can be done without calculators, if the numbers given are "nice". But then I don't see how you can calculate compound interest, annuities, etc. without a calculator.

[@chaewon3744]

Michel van Biezen oh okay i see! Thank you for replying sir! 😊

[@rizz.boy47]

Just plug it into the equation

[@Klalapr]

is it possible to write the calculation formula here?

[@Klalapr]

(1+0.05/365)^(365*3) =1.1618223072 is it right?

[@MichelvanBiezen]

It is possible that different calculators will give you slightly different answers for the 9th or 10th decimal place. But that would represent such a small amount of money that it doesn't matter.

[@MichelvanBiezen]

Yes, you figured it out. (The order of operations required that you work out what is inside the parentheses first)

[@eyerusalemdemewez4534]

Thank you very much.

[@MichelvanBiezen]

You are welcome!

[@eyerusalemdemewez4534]

i appreciate you very very.

[@kgthamilangamingy26j69]

Thanks sir❤❤❤❤

[@rafaelbawono8437]

awesome sir... awesome

[@MichelvanBiezen]

Glad you liked it. 🙂

[@something2261]

What if it was compounded daily for 28 days instead of 3 years what the formula would look like?✅

[@MichelvanBiezen]

Then plug in (28/365) for t

[@fy-g01abayaperla.99]

I also have another question, let's say the bank offers compounded interest daily and it is credited on my bank account monthly, is there a formula to be used to find what I earned for the year?

[@MichelvanBiezen]

Yes, that is the equation here in the video. If the bank compounds daily, but adds the money to the account monthly, they will still give you the same interest as if they added it to the account daily. So the equation shown works in that case.

[@fy-g01abayaperla.99]

@@MichelvanBiezen thank you very much!

[@johndango4043]

I appreciate this guy💯

[@bopppz5529]

what if your t = weeks and not years? what do you do? HELPPPPPPP

[@MichelvanBiezen]

You can convert the week to 1/52 of a year and plug it into the equation.

[@sonianarayan200]

GOD bless you sir

[@MichelvanBiezen]

Thank you.

[@AcheampongSamuel-ye8su]

Thank you sir

[@MichelvanBiezen]

You are welcome.

[@doneiliragaba1266]

Teacher ! what was your Major in University? you seem to Know everything in the world. From Astronomy to Finance. OMG.

[@MichelvanBiezen]

My major was physics, but over the years, besides working as an engineer, I have taught many classis in physics, math, business math, astronomy, chemistry, and Earth science.

[@MrDoubtful42069]

What if you invest money on a daily basis?

[@xvvalz374]

If you don't spend the daily earned interest and instead you accumulate it; then, you will be investing it daily within the same original investment terms. If you invest money into different accounts daily, you will have terms to each of your investments. You must have a lot of money to invest daily on separate accounts. I don't think anyone does it.

[@madamejones7444]

Can the t equal 1 year vs 3years

[@Clifffffffffford]

Thanks!

[@snoopyvonsnoops6305]

Why not 365.25? Over time that will be more accurate.

[@MichelvanBiezen]

The interest rate is based on a 365 day year. Duing a leap year, you get an extra day of interest.

[@curtpiazza1688]

Ooh noo! We've been had by the banks!!! 😮 😂

[@MichelvanBiezen]

Not if we understand their equations.

[@Dietitionist.official]

Awesome

[@ovidiuchis859]

This is obviously wrong. Completely wrong. I'm surprised by the fact that anyone didn't see that.

[@MichelvanBiezen]

What do you think is wrong with the video?

[@Hjonks4627]

Its been a year, shouldn't that more than enough time to say what exactly was wrong with this video?

[@rizz.boy47]

@@Hjonks4627what are you talking about he is doing everything correct?

[@user-ih4rr3ew7e]

I'm getting a different answer when Im calculating I'm getting 1.161822307 instead of 1.161822305

[@MichelvanBiezen]

Calculators do sometimes differ in those least signficant digits.

[@user-ih4rr3ew7e]

@@MichelvanBiezen thanks,nice to know

[@user-ih4rr3ew7e]

One question,let's say I don't want to add the extra digits would it be 1.16?