Multiplying across a result set allows for interest rates to calculated correctly.
In this example we get the interest after 4 years imagine over the 4 years we have rates 5%, 4%, 5% and 3% adding these rates to get 17% (£117) isn't correct.
To get the correct results you have to follow the steps given here.
DROP TABLE interest
CREATE TABLE interest( yr INTEGER, rate INTEGER ); INSERT INTO interest VALUES (2002,5); INSERT INTO interest VALUES (2003,4); INSERT INTO interest VALUES (2004,5); INSERT INTO interest VALUES (2005,3);
We need to instead find the logarithm of the compound interest and then we need to sum that.
SELECT SUM(LN((rate/100)+1)) FROM interest
Then we inverse or take the exponent of the logarithm with
SELECT EXP(SUM(LN((rate/100)+1))) FROM interest
and then finally to get the amount after 4 years we times this amount by 100 (£100).
SELECT EXP(SUM(LN((rate/100)+1)))*100 FROM interest
Hack 24 Multiply Across a Result Set