Posts Tagged ‘Interest Rate’

Pardon My Planet (5/21/11)

May 21, 2011

At first glance, it would seem that the amateur accountant in this strip can’t do math. If she earned a quarter every time she balanced her checkbook, her total would be something like $1.25 or $1.50, right? Yes, but only if she didn’t earn interest on those quarters. Let’s say she balanced her checkbook once a month, then placed her 25-cent reward in a savings account that awarded 5 percent interest at the end of each month. By the end of April, her cumulative deposits and interest payments for the year would have totaled 113 cents. If she balanced her checkbook again in May, then deposited her quarter in the account (remember, interest does not accrue until the end of the month), her total would jump to 138 cents. (Actually, it would be 138.14078125 cents, but I think she can be forgiven for rounding down.)

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