MATLAB: Compound Interest with monthly Contributions, Unable to vectorize.

compoundcontributionfor loopinterest

Hello, I would like help with vectorizing this code so that I can plot the answer. I have been able to get individual answers for each month, however, I cannot write this function in terms of months, so thats why I can not get my answer into a vector. Here's what I have so far.

    %
New_balance=1000
for month=[0:18*12]
New_balance=New_balance*1.005+100
  end

It is monthly interest of .5% for 18 years with 100 every month and an initial $1000. I want to be able to plot(months,New_balance), including the 0th month of $1000. Thank You.

Best Answer

n = 18*12+1;
New_balance([1,n],1)=[1000;0];
for j1=2:n
    New_balance(j1)=New_balance(j1-1)*1.005+100;
end

n = 18*12;
New_balance = filter(1,[1 -1.005],[1000;ones(n,1)*100]);

Related Solutions

MATLAB: School work question, Having troubles adding onto a matrix

Without having time to read through your full homework question (try to ask specific questions rather than post your entire homework question) there are a few obvious things wrong:

First:

a = zeros(217)

will produce a 2d 217*217 matrix. I assume you want:

a = zeros(1,217)

instead.

Second:

Why are you using a for loop parameterised in that way when you don't use that 'time' loop variable at all?

Finally:

What are you trying to achieve with the line:

a(old_balance) = old_balance;

? You are trying to index into an array starting at index 1000 which is odd to start with, but then subsequent times round the loop the old_balance variable will no longer be integer-valued so cannot be used as an index. But you almost certainly do not want to be using it as an index anyway.

I assume you want something more like:

    for n = 1:217
    old_balance = old_balance + 100 + (old_balance * interest);
    a(n) = old_balance;
    end

Almost certainly this isn't the most efficient way to do it, but get the right answer first, then look to efficiency if you need to.

MATLAB: I am not sure how to do this coding, can you please help!!

Since this is your assignment, I'll give you hints. I can give more hints if needed but you'll need to leave a comment showing where you're stuck.

Balance = 3500;
n = 30;
r = .06;
t = 1;
% Balance_vec = zeros(1,n);                 % not used
for i = t:n
    Interest_Balance = Balance*(1+r).^i;    % Comments [1,2]
    New_Balance = Balance+Balance*0.05;     % comment [3]
end
disp(New_Balance);

Comments

[1] The exponent in the formula for compound interest is ^(n*t) where n is the number of times interest is compounded per year and t is the number of years (these are different variables than your 'n' and 't'). You're compounding annually so n=1 and you're looping over 1-year intervals so t=1.

[2] The variable name "Interest_Balance" leads me to believe you're misinterpretting the meaning of that variable. That variable contains the current value of the investment (principal + accrued interest). It's the updated balance.

[3] You're not using the New_Balance variable. You need to work that into the loop. Also, a cleaner way to write [B+B*.05] is [B*1.05]

[4] Somthing to think about after working out the other stuff: On his 65th birthday, does Randall make his final deposit before or after the interest is compounded for that year?

Best Answer

Related Solutions

MATLAB: School work question, Having troubles adding onto a matrix

MATLAB: I am not sure how to do this coding, can you please help!!

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