Compounding quiz

[botpro]

For calculating the percent for a period (ie. month) one can use the following formulae (here as C++ functions):

      double PeriodPct(const double AdblStartCap, const double AdblEndCap, const double AdblPeriods)
        { // = (nthRoot(Kn/K0) - 1) * 100
          return (pow(AdblEndCap / AdblStartCap, 1.0 / AdblPeriods) - 1.0) * 100.0;
        }

      double PeriodPct(double AdbPLpct, const double AdbPeriods)
        {
          const bool fNeg = AdbPLpct < 0.0;
          if (fNeg) AdbPLpct *= -1.0;
          double db = PeriodPct(100.0, 100.0 + AdbPLpct, AdbPeriods);
          if (fNeg) db *= -1.0;
          return db;
        }

If one knows only the percent of x periods and x, then one can use the second function.

Like K-Pia wrote, one can also first calculate the monthly pct, and then extrapolate to 12 months.

 

[Amalgam]

4*4=16
16-1=15
1500%

 

[jk90029]

(Additional quiz)

Someone started investing at 30 and now 80, with 5000 times now of the initial seed.

(For example he made 5000*10K at 80, with seed of saved 10K at 30)

What is the annual compounded rate?

 

[lawrence-lugar]

Okay. I concur, exponential return is impressive.

That sentence made me think of a thermonuclear weapon.

 

[K-Pia]

(Additional quiz)
What is the annual compounded rate?

Since he / she turned eighty,
It has compounded for 49 years.
0.145% Monthly ... 18.9% Yealry ...

 

[K-Pia]

That sentence made me think of a thermonuclear weapon.

Great intuition, Massive !

 

[botpro]

(Additional quiz)

Someone started investing at 30 and now 80, with 5000 times now of the initial seed.

(For example he made 5000*10K at 80, with seed of saved 10K at 30)

What is the annual compounded rate?

499900% in 50 years...:
when using periodic compounding: 18.571250487% p.a.
when using continuous compounding: 17.034386383% p.a.

Is that maybe good ole Warren Buffett? ;-)
No, no Warren Buffet started investing as a kid...

 

[The Obvious]

300% in 6 months means you quadrupled your money.
Quadruple it again, in the next 6 months, means you have x16, which is 1500%.

 

[jk90029]

Since he / she turned eighty,
It has compounded for 49 years.
0.145% Monthly ... 18.9% Yealry ...

Pretty close. But watch 50 Y from 30 to 80

See
1.2^50 =9100.438 =9000

And
1.18^50 = 3927.357 = 4000

 

[danoXP]

Continuous compounding is applicable
----
P at Tzero
300% at Tone = 4P
Ttwo = exp ( 2 * ln(4) ) = 16P
16P is 1500% return