Re: compound interest

BiGYaN <bigyan.techie@xxxxxxxxx> wrote in news:1179181669.880314.304140
@e51g2000hsg.googlegroups.com:

On May 12, 11:18 pm, Richard Heathfield <r...@xxxxxxxxxxxxxxx> wrote:
BiGYaN said:

My guess would be that they use a centralized tabular system and
uses
the table to compute CI. This method is more suitable as there are a
lot of customers and the total computation time saves will amount to
a
lot.

I'm sure that in no way they use the popular formula : A=P(1+R/100)
^T
exactly in this form.

I've worked for a few banks and other financial institutions in my
time,
and I can assure you that that formula is indeed used. Sure, there are
slight tweaks for all kinds of silly and not-so-silly reasons, before
or after using the formula (or even before /and/ after), but the
formula is certainly used.

--
Richard Heathfield
"Usenet is a strange place" - dmr 29/7/1999http://www.cpax.org.uk
email: rjh at the above domain, - www.


I'm in no way suggesting that they don't use the formula. But what I'm
telling is that with the widespread use of automation (ie. Computers)
in modern day banking, using the formula for computation will be a lot
slower. So these automations use tables to help their calculations.
Basically they are following the same formula, but implementation is a
bit different. With so many customers it is more useful for banks to
us this method to speed up their jobs.


I'm obviously missing something. Precisely how do you use a table to
compute compound interest?

Suppose I have several hundred billion accounts, each with a different
monetary value in it ranging from a single unit to hundreds of billions
and I want to add a single days interest (compound or otherwise)... how
can this be done using a precomputed table?

The more difficult form of this problem is to have several hundred
billion accounts over the same range, each with a different amount of
time for the daily compound interest to be added, and I want to compute
the now updated balance. How can this be done with a precomputed table?

Ian W
.

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