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PART 1
a. Explain the meaning of Compound Interest.
i) Compound interest is the summation of interest to the principal sum of a deposit or loan. In other words, it is interest upon interest. This is
This concept of compounding interest is thought to have originated from the 17 Century Italy as “interest on interest” that also implies a sum
th
The rate at which compound interest accumulates is dependent on the frequency of compounding, such that the increase in the number of com
the initial principal amount.
ii) The definition of compound interest is the summation of interest to the principal sum of a deposit or loan. In other words, it is interest upo
The rate at which compound interest accumulates is dependent on the frequency of compounding, such that the increase in the number of com
the initial principal amount.
rest upon interest. This is the result of reinvesting interest rather than paying it out, resulting the interest in the next period earned is based on the principal
st” that also implies a sum will grow at a more rapid rate than of simple interest- that is calculated only based on the principal amount.
ease in the number of compounding periods will result in a greater compound interest. Hence, the amount of compound interest accrued on RM 10,000 co
er words, it is interest upon interest. This is the result of reinvesting interest rather than paying it out, resulting the interest in the next period earned is base
ease in the number of compounding periods will result in a greater compound interest. Hence, the amount of compound interest accrued on RM 20,000 co
earned is based on the principal sum plus the previously accrued interest. Compound interest is standard in economics and finance.
nterest accrued on RM 10,000 compounded at 5% annually will be lower than that on RM 10,000 compounded at 2.5% semi-annually over the same perio
in the next period earned is based on the principal sum plus the previously accrued interest. This concept of compounding interest is thought to have origi
nterest accrued on RM 20,000 compounded at 4% annually will be lower than that on RM 20,000 compounded at 2.4% semi-annually over the same perio
s and finance.
% semi-annually over the same period. Professionals across the finance and economics industries coined the phrase “miracle of compound interest” since th
ing interest is thought to have originated from the 17 Century Italy as “interest on interest” that also implies a sum will grow at a more rapid rate than of
th
% semi-annually over the same period. Professionals across the finance and economics industries coined the phrase “miracle of compound interest” since th
racle of compound interest” since the interest-on-interest effect can generate increasingly positive returns based on
ll grow at a more rapid rate than of simple interest- that is calculated only based on the principal amount. Compound interest is standard in economics and
racle of compound interest” since the interest-on-interest effect can generate increasingly positive returns based on
nterest is standard in economics and finance.
b. How can Mathematics be used to calculate the Compound Interest?
Compound interest is calculated based on the principal sum, interest rate- annual percentage rate (APR), and the time involved using these fo
When the interest is compounded annually / per annum / once a year:
A P(1 r)t
A = the amount of money accumulated after n years, including interest. P = the principal sum (the
r = the annual rate of interest (percentage)
t = the number of years the amount is deposited or borrowed for.
Applying the formula for the given situation- if you borrow for 5 years the formula will look like:
A P(1 r)5
This formula applies to both money invested and money borrowed. Another formula that can be applied is:
A P(1 r )nt
n
A = the amount of money accumulated after n years, including interest. P = the principal sum (the
r = the rate of interest (percentage)
t = the number of years the amount is deposited or borrowed for. n = the number of compounding
This formula can be applied when the compounding of interest in a year is more than once. For instance, if the interest is compounded yearly
= 52; daily, then n = 365; and so forth, regardless of the number of years involved.
(the initial amount you deposit or borrow)
P = starting principal
r = rate of compound interest
n = number of years of investment
The amount saved in the first year is J 10000(1 ) 11000
10 1
1
100
J 10000(1 10 )2 12100
The amount saved in the second year is
2
100
The amount saved in the third year is J 10000(1 ) 13310 and so forth
10 3
3
100
The amount saved in the 25th year is J25 10000 1.125 108347
Since the calculated values using the formula is tallied with the values tabulated at the table above using Microsoft Excel. Therefore, the form
Microsoft Excel. Therefore, the formula of J is applicable.
Hence, the total amount saved after 25 years is
J J J ... J
0 1 2 25
...100001.1
10000 10000 1.1 10000 1.1 2 25
We can use the formula for the sum of the first n terms of an arithmetic progression as below (note that there are 26 terms in total including t
10000 1.126 1
1.11
RM1, 091,818
Therefore, we can conclude that the dream of saving at least RM 1 million after 25 years can be realised as RM 1,091,818 is more than RM 1
nce, the total amount saved after 25 years is
0
J J ... J
1 2 25
...100001.1
00 10000 1.1 10000 1.1 2 25
can use the formula for the sum of the first n terms of an arithmetic progression as below (note that there are 26 terms in total including the first term whi
000 1.126 1
erefore, we can conclude that the dream of saving at least RM 1 million after 25 years can be realised as RM 1,091,818 is more than RM 1,000,000.
including the first term which is the initial amount saved)
e than RM 1,000,000.
PART 3
District Price Index Number of houses
Gombak 100 130.51
385000 215
295000
15 1846.2
14 1740.48
33 5041.74
2 282.76
Therefore, the composite index I
1305.11846.2 1740.48 5041.74 282.76
10 15 14 33 2
10216.28
74
138.06
Using the formula of composite price index below that is derived from chain rule,
I I
05,10 10,18 05,18
I 100
Given that the composite index for the year 2018 based on the year 2010 remain unchanged,
I
05,18
138.06 100 100
I 05,18
138.06
Hence, using the price index formula, the market price of houses in the Klang Valley in 2018
I
05,18
P18
100
P
05
138.06
P
18
292157
100
P 403351.95
18
Using the formula of composite price index below that is derived from chain rule,
I I
05,18 18,25 05,25
I 100
I
138.06 112
05,25
100
I 05,25
154.63
Part 4
Stage 3 is copied using the initial length of square as 4 inches.
Stage 4
Using initial length of square of 4 inches, the Stage 4 Pythagoras’ Tree is constructed.
Table 2
Stage 1 2 3 4 5 …
Number of outer squares 2 4 8 16 32
10 … n
1024 2
n
Method 1:
The sequence presented by the number of outer squares of the Pythagoras’ Tree is a Geometric Progression because
T2
4 2 , T3
8 2
T 2 1
T 4 2
T2
T3
T T 1 2
T 2 1
T 2(2)n1
2(2n )(21)
n
1
2(2 )( )
2
2n
Method 2:
T 2 21
T 4 22
T 8 23
T 16 24
T 32 25
Using induction, we can deduce that each term is a power of 2, and the increment for each power is one. Therefore,
T 2n
Further Exploration
T
2n
lim( n
) lim[ ]
n
Tn1
n1
n 2
n
2
lim[ n
]
1
n
2 (2 )
lim[ 1
]
1
n
2
lim[2]
n
2
Table 3
Distance from tip of nose to bottom of chin (a) 8.5 10.0 8.7
Distance from centre of lips to bottom of chin (b) 4.8 6.0 5.4
Value of a:b 1.771 1.667 1.611
7.8 7.3 7.6
4.5 4.1 4.9
1.733 1.780 1.551
The ratios obtained from 6 different people are tabulated in the Table 3.
The values of the distance from tip of nose to bottom of chin (a) and the distance from centre of lips to bottom of chin (b) that are taken abov
Gross value of a
8.5 10.0 8.7 7.8 7.3 7.6 8.317
6
Gross value of b
4.8 6.0 5.4 4.5 4.1 4.9 4.950
6
Ratio of the gross readings taken 8.317 1.680
4.950
The difference between the ratio of the gross readings taken and the divine ratio is 1.680 1.618 0.062 which is negligible. Therefore, the
are independent and random. Both a and b are related by taking the ratio a:b which will give us values that are approximated to the golden ratio that has an
tio of the gross readings taken is nearing the divine ratio (Golden ratio).
mated to the golden ratio that has an approximate value of 1.618 with an uncertainty of 0.1 .
What is the golden ratio?
The golden ratio is a special irrational number that is approximately equal to 1.618. It appears many times in geometry, art, architecture an
looks like this:
a ab
b a
1.6180339887498948420
Historically, the number can be seen in the architecture of many ancient creations, like the Great Pyramids and the Parthenon. In the Great Py
the ratio of 144 to 233 is 1.618, which eventually converges to 1.618.
The Golden Rectangle is also closely related to the Golden ratio as its proportion of its dimension is approximately to the value 1.618. This i
ratio is more than an obscure term found in Mathematics and Physics. It also revolves around us in our daily lives.
ecial irrational number that is approximately equal to 1.618. It appears many times in geometry, art, architecture and other fields. The Golden ratio is a spe
an be seen in the architecture of many ancient creations, like the Great Pyramids and the Parthenon. In the Great Pyramid of Giza, the length of each side o
.618, which eventually converges to 1.618.
lso closely related to the Golden ratio as its proportion of its dimension is approximately to the value 1.618. This is known as one of the most visually sati
ure term found in Mathematics and Physics. It also revolves around us in our daily lives.
. The Golden ratio is a special number found by dividing a line into two parts so that the longer part divided by the smaller part is also equal to the whole
za, the length of each side of the base is 756 feet with a height of 481 feet. The ratio of the base to the height is roughly 1.5717, which is close to the Golde
ne of the most visually satisfying of all geometric forms – hence, the appearance of the Golden ratio in art. The Golden rectangle is also related to the Gold
aller part is also equal to the whole length divided by the longer part. In an equation form, it
1.5717, which is close to the Golden ratio. Around 1200, the mathematician Leonardo Fibonacci discovered the distinctive properties of the Fibonacci seq
n rectangle is also related to the Golden spiral, which is created by making adjacent squares of Fibonacci dimensions. In the beauty industry, studies have s
ctive properties of the Fibonacci sequence. This sequence links directly into the Golden ratio because any ratio of two consecutive Fibonacci numbers is v
n the beauty industry, studies have shown that when test subjects view random faces, the ones they deem most attractive are those with solid parallels to th
consecutive Fibonacci numbers is very close to the Golden ratio. As the numbers increase, the ratio becomes even closer to 1.618. For instance, the ratio o
ve are those with solid parallels to the Golden ratio. Faces judged as the most attractive depict Golden ratio proportions between the width of the face and t
ser to 1.618. For instance, the ratio of 3 to 5 is 1.666; the ratio of 13 to 21 is 1.625;
between the width of the face and the width of the eyes, nose, and eyebrows. In toto, the Golden
Reflection
i) While I was conducting this project, I have learnt how to appreciate and enjoy the beauty of Mathematics. I have learnt how to apply my In
daily-life problems that relate to finance.
The moral values that I have put into practice is compassion and dedication in conducting this project. I have poured my heart, mind and sou
me. Without it, I could not fulfill my abjured hopes and dreams. These are the benefits of the project.
ii) In the making of this project, I have spent countless nights researching and completing this project. I realise this subject is compulsory for
project.
While I was conducting this project, I have learnt how to appreciate and enjoy the beauty of Mathematics. I have learnt how to apply my Ind
relate to finance.
The moral values that I have put into practice is compassion and dedication in conducting this project. I have poured my heart, mind and sou
order to complete this project. I also did not give up in doing my project; I have completed it to the end.
Index Number skills, calculating compound interest skills, identifying progression skills and tabulating data skills more efficaciously. I also learnt that the
ul into finishing this project with the best result. I also put in a lot of hard work and commitment in order to complete this project. I also did not give up in
or me. Without it, I could not fulfill my abjured hopes and dreams. These are the benefits of the
dex Number skills, calculating compound interest skills, identifying progression skills and tabulating data skills more efficaciously. These skills are very c
ul into finishing this project with the best result. I also put in a lot of hard work and commitment in
re efficaciously. I also learnt that the skills mentioned are very crucial in our life; it can help us solve our
this project. I also did not give up in doing my project; I have completed it to the end. In the making of this project, I have spent countless nights research
efficaciously. These skills are very crucial in our life; it can help us solve our daily-life problems that
have spent countless nights researching and completing this project. I realise this subject is compulsory for