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Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5069  
Subject: Re: Calculating interest Date: 2/24/2004 12:52 AM
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A simple question: when calculating the effects of interest for this purpose (starting with an assumed yearly growth rate), is it best to simply use that yearly growth rate and intervals of years, or divide the growth rate by 12 and use intervals of months?

To be precisely correct you must use the same method as is used in the official this-is-what-somebody-pays interest calculation.

But in practice it usually doesn't matter all that much. Sure, 12% interest per year, versus 1% interest per month, is over half a percent a year difference... and if there's enough time for that to amount to anything worthwhile, there's enough time that the rate of return could fluctuate.
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