Question

For the factor (F/P,10%,43), find the percent difference between interpolated and formula-calculated values, assuming the formula-calculated value is the correct one.

Answer 1

Answer:

For the factor (F/P,10%,43),

The question is to find the percentage difference between the interpolate and formula calculated value of F/P single payment compound amount:

Given that,

F=P(F/P , i, n)

=P(F/P , 10% , 43)

Where,

F is the future amount

P is present value of salary

i is interest rate

n is number of terms that the money is for

Firstly, find the interpolated value from Table-15. We will get the value of at and which is 45.2593 and 72.8905 respectively.

Now, calculate the using the interpolation for

Thus, the interpolated value of compounded amount at n=43 is 61.838052

Now, the next step is to find the formula calculated value of P(F/P, 10% ,43)

F=P(1+i)ⁿ

Thus, the formula-calculated value at n=43 is 60.24

As given in question, take formula calculated value correct and show the percentage difference between both the values.

% difference  

=2.64%

Thus, the percentage difference between the interpolate and formula calculated value is 2.64%.