# Math problem - value of money **URL:** \ **Category:** Factual Questions\ **Created:** [December 5, 2014, 12:45am UTC](https://boards.straightdope.com/t/math-problem-value-of-money/706365 "2014-12-05T00:45:54Z")\ **Posts on this page:** 7\ **Page:** 1
**Author:** ![smithsb](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/smithsb/32/12107_2.png) [@smithsb](https://boards.straightdope.com/u/smithsb)\ **Post date:** [December 5, 2014, 12:45am UTC](https://boards.straightdope.com/t/math-problem-value-of-money/706365/1 "2014-12-05T00:45:54Z")
I’m trying to get my grandson interested in investing as the back story. Got a check for $484.94; mortgage company redid the escrow based on a property tax change (I’m older with a slight break) so I got some back. Deposited the money against the principle. I’ve got nine years and nine months to pay and the interest rate is 3.74% APR. I told him it’s about $400 off the principle that I’m paying the ~4% on so seat of pants calculation was I’d save $16.00 bucks a year for 10 years - princely sum of $160.00 over that time. We agreed that finding a $16 dollar bill in the street was worth bending over to pick up. What’s the exact method of finding out the savings / year / mortgage lifetime? Got to be an Excel formula for that, right? ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [December 5, 2014, 2:58am UTC](https://boards.straightdope.com/t/math-problem-value-of-money/706365/2 "2014-12-05T02:58:47Z")
First of all, don’t use APR since it includes all of your fees. Use the nominal interest rate r. The formula is FV = PV(1+r/n)[sup]nt[/sup]. For a monthly mortgage your n=12, t is 9.75. Let’s say the interest rate is 3.5% then FV = 484.94(1+0.035/12)[sup]12x9.75[/sup] or $681.83 ---
**Author:** ![smithsb](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/smithsb/32/12107_2.png) [@smithsb](https://boards.straightdope.com/u/smithsb)\ **Post date:** [December 5, 2014, 5:08am UTC](https://boards.straightdope.com/t/math-problem-value-of-money/706365/3 "2014-12-05T05:08:08Z")
Thanks from the math challenged. ---
**Author:** ![bob\_2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bob_2/32/3341_2.png) [@bob\_2](https://boards.straightdope.com/u/bob_2)\ **Post date:** [December 5, 2014, 11:30am UTC](https://boards.straightdope.com/t/math-problem-value-of-money/706365/4 "2014-12-05T11:30:18Z")
Surely it would be better to carry on paying the same monthly and end up paying less interest overall? I don’t have the maths to work it out, but my instinct says that it should be. ---
**Author:** ![Your\_Great\_Darsh\_Face](https://avatars.discourse-cdn.com/v4/letter/y/ac8455/32.png) [@Your\_Great\_Darsh\_Face](https://boards.straightdope.com/u/Your_Great_Darsh_Face)\ **Post date:** [December 5, 2014, 1:06pm UTC](https://boards.straightdope.com/t/math-problem-value-of-money/706365/5 "2014-12-05T13:06:19Z")
A $16 bill isn’t worth bending over to pick up, though. Might as well accept an envelope full of shares in Kotzash Mutual. ---
**Author:** ![Greg\_Charles](https://avatars.discourse-cdn.com/v4/letter/g/839c29/32.png) [@Greg\_Charles](https://boards.straightdope.com/u/Greg_Charles)\ **Post date:** [December 5, 2014, 9:44pm UTC](https://boards.straightdope.com/t/math-problem-value-of-money/706365/6 "2014-12-05T21:44:02Z")
**Saint Cad** already nailed the formula, so all I can add is that it’s “principal” not “principle”, although you are teaching your grandson about the principles of financial math. ---
**Author:** ![smithsb](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/smithsb/32/12107_2.png) [@smithsb](https://boards.straightdope.com/u/smithsb)\ **Post date:** [December 5, 2014, 10:14pm UTC](https://boards.straightdope.com/t/math-problem-value-of-money/706365/7 "2014-12-05T22:14:54Z")
> [@Greg\_Charles](#): > > **Saint Cad** already nailed the formula, so all I can add is that it’s “principal” not “principle”, although you are teaching your grandson about the principles of financial math. Add English Challenged to Math Challenged.:smack: