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P 6,500 J 8% T 7 Years M 12 F ? I J M N MT: Compound Interest Exercises

1. If Anne deposits $6,500 into an account paying 8% interest compounded monthly, after 7 years she will have $11,358.24. 2. If $12,000 is placed in an account with 3% interest compounded annually, after 1 year it will be $12,360, after 2 years it will be $12,730.80, and after 3 years it will be $13,112.72. 3. If $41,500 is deposited into an account with 5% interest compounded quarterly, after 10 years the amount will be $68,210.21.

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400 views

P 6,500 J 8% T 7 Years M 12 F ? I J M N MT: Compound Interest Exercises

1. If Anne deposits $6,500 into an account paying 8% interest compounded monthly, after 7 years she will have $11,358.24. 2. If $12,000 is placed in an account with 3% interest compounded annually, after 1 year it will be $12,360, after 2 years it will be $12,730.80, and after 3 years it will be $13,112.72. 3. If $41,500 is deposited into an account with 5% interest compounded quarterly, after 10 years the amount will be $68,210.21.

Uploaded by

Mj Pamintuan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Compound Interest Exercises

1. If Anne will deposit P6500 into an account paying 8% compounded monthly, how much money will be in
her account after 7 years?

P=6,500 j n=mt F=P(1+i)n


i=
m
j=8 % ¿ 12(7)
( )
84
1
2.
.08 ¿ 6,500 1+
t=7 years ¿ ¿ 84 150
12
m=12 ¿ 11,358.24
1 −3
¿ 6.666666667 ×10 ∨
F=? 150
A principal of P12,000 is placed in a savings account at
3% compounded annually. How much is the account
after one year? two years? three years?

P=12,000 j n2 =mt 2 F 1=P(1+i)n F 3=P(1+i)n


i=
m
j=3 % ¿ 1(2) 1
¿ 12,000 ( 1+ .03 )3
¿ 12,000 ( 1+ .03 )
.03
t 1=1 year ¿ ¿2
1 ¿ 12,360 ¿ 13,112.72
t 2=2 years ¿ .03
n3 =mt 3 F 2=P(1+i)
n
t 3=3 years n1 =mt 1
¿ 1(3) ¿ 12,000 ( 1+ .03 )2
m=1 ¿ 1(1)
F 1=? ¿3 ¿ 12,730.8
¿1
F 2=?

F 3=?
3. If you deposit P41,500 at 5% annual interest compounded quarterly, how much money
will be in the account after 10 years?

P=41,500
j n=mt F=P(1+i)n
j=5 % i=
m
t=10 years ¿ 4 (10) ¿ 41,500 ( 1+0.0125 )
40

.05
¿ ¿ 40
m=4 4 ¿ 68,210.21

F=? ¿ 0.0125

4. Find the present value of P30,000 for 2 years and 6 months, if money is worth 11%, m = 2.

F=30,000 j n=mt P=F (1+i)−n


i=
m
j=11 % ¿ 2 ( 2 )+ 1 ¿ 30,000 ( 1+ 0.055 )
−5

.11
t=2 years∧6 months ¿ ¿5
2 ¿ 22,954.03
m=2 ¿ 0.055
P=?

5. If money is worth 24% compounded monthly, what is the present value of


P240,000 which is due at the end of 10 years and 6 months?

F=240,000 j n=mt P=F (1+i)−n


i=
m −126
j=24 % ¿ 12 (10 )+ 6 ¿ 240,000 ( 1+ 0.02 )
6. .24
t=10 years∧6 months ¿ ¿ 126 ¿ 19,796.55
12
m=12 ¿ 0.02 What effective rate is equivalent to 11% compounded quarterly?
P=?

( )
j=11 % j
m
w= 1+ −1
m=4 m

¿ ( 1+
4 )
4
w=? .11
−1

¿ 11.46 %

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