## 1972, September 7: Compound-interest calculations from Peter

This “letter” consisted entirely of four pages of Peter manually calculating compound interest, apparently to show George and Helen how compound interest worked. I’m a little bit surprised that George and Helen didn’t already know about compound interest; they were both over 60 by this point, and had both dealt with plenty of practical financial matters in their own lives.

I’m not transcribing the numbers in these pages, though I am providing photos of the pages. But I’ve transcribed most of the text annotations (see further down on this page, after the images).

The first page is on lined 3-hole-punched paper. The other three are on unlined paper, written on the backs of mimeographed copies of a “National Peace Poll” ballot, which asks: “Should Congress bring the war to an end by cutting off the funds?”

Transcriptions of the bits of text:

Heading for page 1: depositing \$100 at end of each month compounded (at 5.75% per anum)

P. 1 shows the results of compounding monthly, quarterly, semiannually, and annually.

you get a little more interest when it’s compounded more often… but not much difference…

if you need information about compounding interest quarterly or semiannually, consult a friendly stockbroker with handy tables…*

Corresponding footnote, on p. 3: * or go to the library & look up some accounting tables: it’s called “amount of \$1 per period”…

Note at end of p. 1, about the compounding numbers: so by the 23rd year, you’d have doubled your money…

P. 2 shows some calculations, and the following text:

the guy at the bank was ignorant: there are tables (see, for example, “Accounting & Economic Decisions,” by Donald Corbin, Appendix B, “The Use of Interest Tables”, Table 3, “Amount of 1 Per Period”——which shows how much your account amounts to if you deposit \$1 a year and it’s compounded annually at 6% (=\$533.13 after 60 years!) but doesn’t show \$100/mo. compounded at 5 3/4%——so I worked it out myself…

P. 3 is mostly calculations, plus the footnote mentioned above. Also some differences and 2nd differences between succeeding interest rates, with this note: negative second differences probably indicate mistakes in computation…

Finally, p. 4 is also almost entirely calculations, plus one last bit of text:

O what a grind i am… & the weird part is——i actually enjoy turning on the inner computer & watching it churn out this stuff…