Re: VAT calculation rounding error

[Steven D'A. <st...@cy...>]

On Mon, Mar 04, 2002 at 05:47:18PM +0000, kevin bailey wrote:
> hi roy,
> 
> i could be right off the mark but...
> 
> my calculator gives me an answer of 16.625 - which in normal maths gets 
> rounded to 16.63
> 
> but in financial maths is it not the case that sometimes numbers ending 
> in '5' are rounded down and other times are rounded up.
> 
> something to do with a number being odd/even or something...
> 
> i think this is done because if '5' is always rounded up then totoals 
> tend to drift upwards with huge amounts,

If you are concerned about vast numbers of rounded fives, the conventional
method to deal with this problem is the "even-odd rule".

This rule says that:

 - if the five is the last significant digit and the round-off digit (the 
   one to the left of the 5) is odd, round up;

 - if the five is the last significant digit and the round-off digit is
   even, don’t round up

For example, 0.45 would round to 0.4, but 0.55 would round to 0.6.

However, the even-odd rule does NOT apply if there are additional digits
after the five. For example, 0.45001 is closer to 0.5 than it is to 0.4,
so you should round it to 0.5.


-- 
Steven D'Aprano
Cybersource Pty Ltd, ACN 053 904 082
Level 9, 140 Queen St, Melbourne VIC 3000 
Tel: +61 3 9642 5997  Fax: +61 3 96425998 
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