GE1707

Name: Iverson G. Silvestre

Date:

Direction: Provide the step-by-step solutions to the following problems. (5

items x 5 points)

1. What will be the maturity value of ₱12,000 invested for four (4) years at
15% compounded quarterly?

solution
compound interest
formula is A =
P(1+r/n)nt
where "A" is the ending amount(maturity amount ), "P" is the
beginning amount (or "principal"), "r" is the interest rate
(expressed as a decimal), "n" is the number of compoundings a year,
and "t" is the total number of years.
If interest is compounded yearly, then n = 1; if semi-annually, then
n = 2; quarterly, then n = 4; monthly, then n = 12; weekly, then n =
52; daily, then n = 365; and so forth, regardless of the number of
years involved
here P = 12000
pesos time t = 4
n = 4 since
quarterly r =
15% or .15
thus amount A = 12000 (1+.15/4)(4*4)
A = 12000 (1+ .0375)(16) = 12000(1.0375)16
= 12,000(1.802227807)
=21,626.73368 =21, 626.73 pesos
maturity amount A = 21, 626.73 pesos is answer

2. Determine the maturity value of ₱3,000 invested at 9.5% compounded

semiannually for 3 ½ years

3000 x 9.5% = 285,

= 285 x 7 = 1995
+ 3000
= 4995 total (66% more)
.
3. What amount must be invested now in savings account earnings 9%
compounded quarterly to
accumulate a total of ₱21,000 after 4 ¾ years?

Given: j = 9% = 0.09, m = 4, F = 21,000 T = 4¾years = 4.75 years, n = tm

=4.75(4), i = j/m = 0.09/4 = 0.225

Solution: P = F/(1+i)ˆn
=21,000/(1+0.0225)ˆ19
=21,000/(1.0225)ˆ19
=21,000/1.526170367
=13,759.931691
=13,759.93 Pesos

4. Millet wants to provide a ₱200,000 graduation gift for her daughter Mae
who is now 16 years old. She would like the fund to be available by the
time her daughter is 20. She decides on an investment that pays 10%
compounded quarterly. How large must the deposit be?
Given: F = 200,000, t = 4 years, j = 10%0.10 m = 4 , n = tm = 4(4) =
16, i = j.m = 0.10/4 = 0.025
Solution P = F(1+i)ˆ-n
=200,000(1+0.025)ˆ-16
=200,000(1.025) ˆ-16
=200,000(0.6736249335)
=134,724.99pesos

5. Ms. Cruz can buy a piece of property for ₱6,500,000 cash or ₱4,000,000
down payment and
₱4,200,000 in five (5) years. If she has money earning 8% converted
quarterly, which is a better purchased plan and by how much?

Solution:
=2,500,000(1+0.32
)4x5 4
=2,500,000(1+0.08) 20
=2,500,000(1.08)20
=11,652,392.86 pesos
05 Seatwork 1 *Property of
STI
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