Podcast
Questions and Answers
How long will it take ₱3,000 to accumulate to ₱3,500 in a bank savings account at 0.25% compounded monthly?
How long will it take ₱3,000 to accumulate to ₱3,500 in a bank savings account at 0.25% compounded monthly?
It will take 740 periods, or 61.67 years.
How long will it take ₱1000 to earn ₱300 if the interest is 12% compounded semi-annually?
How long will it take ₱1000 to earn ₱300 if the interest is 12% compounded semi-annually?
It will take 4.503 periods, or 2.5 years.
At what nominal rate compounded semi-annually will ₱10,000 accumulate to ₱15,000 in 10 years?
At what nominal rate compounded semi-annually will ₱10,000 accumulate to ₱15,000 in 10 years?
The nominal rate is 0.0410 or 4.10%.
At what interest rate compounded quarterly will money double itself in 10 years?
At what interest rate compounded quarterly will money double itself in 10 years?
What is the nominal rate of interest if ₱4,000 accumulates to ₱10,000 in 8 years with interest compounded quarterly?
What is the nominal rate of interest if ₱4,000 accumulates to ₱10,000 in 8 years with interest compounded quarterly?
At what nominal rate compounded semi-annually will ₱5000 amount to ₱6000 in 2 years?
At what nominal rate compounded semi-annually will ₱5000 amount to ₱6000 in 2 years?
In how many years will it take ₱18,000 accumulate to ₱20,000 when deposited in a savings account that earns 0.250% compounded monthly?
In how many years will it take ₱18,000 accumulate to ₱20,000 when deposited in a savings account that earns 0.250% compounded monthly?
How long will a principal double when invested at 10% compounded semi-annually?
How long will a principal double when invested at 10% compounded semi-annually?
Flashcards
Compound Interest
Compound Interest
Interest calculated on the initial principal and also on the accumulated interest of previous periods.
Interest rate
Interest rate
The percentage which will be added to the principal sum for its use.
Time
Time
The length of time (often in years) for which money is borrowed or invested.
Principal
Principal
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Accumulated Value
Accumulated Value
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Nominal Rate
Nominal Rate
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Compounded Quarterly
Compounded Quarterly
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Compounded Semi-Annually
Compounded Semi-Annually
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Compounded Monthly
Compounded Monthly
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Study Notes
- The lesson involves solving problems related to the rate of interest and time in compound interest scenarios.
Example 1
- It will take 740 periods, or 61.67 years, for ₱3,000 to accumulate to ₱3,500 in a bank savings account at 0.25% compounded monthly.
Example 2
- At 12% interest compounded semi-annually, it will take 4.503 periods, or 2.5 years, for ₱1000 to earn ₱300.
- Interest is earned only at the end of the period; 5 six-month periods are needed to reach ₱300 in interest.
Example 3
- To accumulate ₱10,000 to ₱15,000 in 10 years compounded semi-annually requires a nominal rate of 4.10%.
- The periodic interest rate is 2.05%.
Example 4
- For money to double itself in 10 years compounded quarterly, an interest rate of 7.00% is required.
- The periodic interest rate is 1.75%.
Seatwork
- Determine the nominal rate of interest if ₱4,000 accumulates to ₱10,000 in 8 years compounded quarterly.
- Determine the nominal rate compounded semi-annually for ₱5000 to amount to ₱6000 in 2 years.
- Calculate how many years it will take for ₱18,000 to accumulate to ₱20,000 in a savings account earning 0.250% compounded monthly.
- Calculate how long will the principal double when invested at 10% compounded semi-annually.
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