dap1@ihlpf.UUCP (darrell plank) (12/01/83)
#N:ihlpf:6200020:000:987
ihlpf!dap1 Nov 30 22:10:00 1983
I was trying to figure out the "equivalent interest" I have been earning
in our savings plan here at ATT-BTL. In other words, I have put in a
certain amount of money each month and at the end of N months I have X
dollars. What constant compounded interest would have given the same
yield? It seemed like it ought to be real easy, but after about a second
it became plain that a N'th order polynomial was involved. I then thought
that it might be easier if I had made the SAME payments each month. After
about another second, it was obvious that what I needed to solve was:
(SUM(i = 0 to N) X**i ) = A.
This is equivalent to
X**(N+1) - AX + A - 1 = 0.
Is there some easy way to solve this, or do accountants have to resort to
numerical analysis whenever they want this kind of figure?
Thanks,
Darrell Plank
ihlpf!dap1