Financial Calculations - Future Value based on Continuous and Compounding Interest

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Contributor
Posts: 50

Financial Calculations - Future Value based on Continuous and Compounding Interest

[ Edited ]

HI,

on January 1 of each year,$5000 is invested in an amount .complete the data step with do loop to determine  the value of the account after 15 years 1) if a constant annual invest rate of 10% is expected .2)if a compounding annual interest rate of 10 % is expected .?

wht should be the code ??

please help ?

Contributor
Posts: 50

DO LOOP

[ Edited ]

HI,

on January 1 of each year,$5000 is invested in an amount .complete the data step with do loop to determine  the value of the account after 15 years 1) if a constant annual invest rate of 10% is expected .2)if a compounding annual interest rate of 10 % is expected .?

wht should be the code ??

please help ?

this is my code :

 

 

DATA WORK.INVEST1;
	DO COUNT=1 TO 15;
		CAPITAL +5000;
		CAPITAL+(CAPITAL*.10);
		output;
	END;
RUN;

 

 

Grand Advisor
Posts: 17,332

Re: DO LOOP

That looks pretty close. I'm not sure what the first requirement means though? Does that mean you invest an additional 10% each, on top of the 5000/year?

 

 

1) if a constant annual invest rate of 10% is expected
Contributor
Posts: 50

Re: DO LOOP

hi,

what should be the code for partone and part second ??

 

 

Grand Advisor
Posts: 17,332

Re: DO LOOP

You have the second requirement. 

 

I dont understand the first requirement. If you clarify it, perhaps someone can help. 

Grand Advisor
Posts: 17,332

Re: DO LOOP


Reeza wrote:

That looks pretty close. I'm not sure what the first requirement means though? Does that mean you invest an additional 10% each, on top of the 5000/year?

 

 

1) if a constant annual invest rate of 10% is expected

Can you please answer the question above. Reposting without clarifying doesn't really add anything. 

 

 

Grand Advisor
Posts: 9,576

Re: DO LOOP

if it is continuous compounding, formula should look like this ?

 

5000*e^0.1*15 +

5000*e^0.1*14 +

.......

5000*e^0.1*1

 

 


data _null_;
 do year=1 to 15;
  CAPITAL+5000*constant('e')**(0.1*year);
  put year= CAPITAL=;
 end;
run;
Grand Advisor
Posts: 17,332

Re: DO LOOP

No, because doing *1.1 each year will account for the compounding.

 

But this is an exercise for any actual calculation there are SAS functions that will handle this.

Contributor
Posts: 50

DOLOOP2

HI,

on January 1 of each year,$5000 is invested in an amount .complete the data step with do loop to determine  the value of the account after 15 years 1) if a constant annual invest rate of 10% is expected .2)if a compounding annual interest rate of 10 % is expected .?

wht should be the code ??

please help ?

Grand Advisor
Posts: 17,332

Re: DOLOOP2

For Q1 is it invest rate or interest rate?

 

Your initial answer was correct for Q2. 

Contributor
Posts: 50

Re: DOLOOP2

HI,

For q1, it is interest rate.

what should be the code ?

Contributor
Posts: 50

Re: DOLOOP2

hi,

for Q1) if a constant annual interest rate of 10% is expected.?

what should be the code ?

Grand Advisor
Posts: 17,332

Re: DOLOOP2

@Ksharp code was correct then - it uses a continuous interest rate formula that you can find via google.

http://www.mathwarehouse.com/compound-interest/continuously-compounded-interest.php

 

This answer may not be correct, it depends partly on when you account for the 5000, beginning or end of year. This assumes beginning of the year.

 

Good Luck.

 

data want;
capital1=0;capital2=0;
 do year=1 to 15;
  capital1 = (capital1+5000)*constant('e')**0.1;
  capital2 = (capital2+5000)*1.1;
  output;
 end;
run;

proc print data=want;
run;

 

 

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