Salosagcol, Leobert Yancy G.

BSE SST II-2

Activity 5.3

Solve the following problems. Show your solution.

1. If Php 5, 000 is placed in an account at 4% and is compounded quarterly for 10 years. How much
is in the account at the end of 10 years? How much is the interest?
Given: P = 5,000
r = 0.04
n=4
t = 10
nt
Future Value = A = P (1 + nr ) = 5,000 (1 + 0.04
4(10)
4
)
= 5,000 (1.01) 4(10) = 40

= 7,444.31
Thus after 10 years there will be 7,444.31 in the account
= 7,444.31 – 5000
I = 2,444.31
= 2,444.31 is the Interest

2. $2,000 is placed in an account at 5% compounded annually for 2 years. It is then withdrawn at

the end of the two years and placed in another bank at the rate of 4% compounded annually for
5 years. What is the balance in the second account after the 5 years?

Given: P = $ 2,000
r = 0.05
n=1
t = 2 years
Future Value = A = P (1 + nr )nt = 5,000 (1 + 0.05
1(2)
1 )
= 2,000 (1.05) 1(2) = 2

= $ 2,205
Thus, after 2 years there will be $ 2,205 in the first base account.

Given: P = $ 2,205
r = 0.04
n=1
t = 5 years
nt
Future Value = A = P (1 + nr ) = (1 + 0.04 ) 1(5)
1
= $2,205 (1.04)
1(5) = 5

= $ 2,682.71
After 5 years there will be $ 2,682.71 in the account.
3. What principal you have to deposit in a 6% saving account compounded monthly in order to
have a total of $20,000 after 8 years?
Given: P = $ 20,000
r = 0.06
n = 12
t=8
Future Value = A = P (1 + nr )
nt

= 2,000 = P (1 + 0.06
12 )
12(8)

P = 20,000
1.005 (96)
P = 12,390.47