Compound Interest CHAPTER 3 • Basic Business MatheMatics

3. Carl Rudolph has invested P200,000 for 1 year. Find the future value based on the Name: Track & Strand: Date:
following conditions:
a. simple interest at 7.5% and Activity 3.3.5. LET’S CREATE!
b. 7.5% interest compounded every 6 months. Read the situation and perform the task below.
Then, find the difference between the two values.
Situation:
Arbey and Earvin, Bachelor of Science major in Entrepreneurship
students, need P500,000 as initial capital in putting up a business dubbed
4. Gabriel has a choice for his investment of P250,000. He can invest it in a bank with as “Buko and Waffle Corner” atSMSeaside Cebu. Suppose you have a lending
either of the conditions below. company. Arbey and Earvin will borrow the needed amount from your
a. 4% compounded quarterly for 3 years or company. With this, you have to prepare two sets of computations on how
they can pay you back so they can choose.
b. 2% compounded semi-annually for 6 years. In preparing your computations, consider the following elements:
Find the future value of both conditions. Then, identify which of them gives the • their capacity to pay
higher value and explain briefly why it accumulates a higher value than the other.
• gaining 1% to 2% only of the money to be borrowed
• maturity date

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