Compound

Interest
 Compound Interest
• Procedure in which interest is
periodically calculated and added to
the principal
• Applied in long-term loans
 Compound Interest
𝑵
𝒊
𝑭𝑽 = 𝑷 𝟏+
𝒎

𝑃= Principal amount
𝑖 =Interest rate
𝑁= Number of periods
𝑚= Number of
Compounding Periods per
year
Examples:
Compute for the future value.
1.𝑷 = 𝟏,𝟎𝟎𝟎,𝟎𝟎𝟎 ;𝒊= 8%;
𝒏 = 𝟐;𝑴𝒐𝒏𝒕𝒉𝒍𝒚𝑪𝒐𝒎𝒑𝒐𝒖𝒏𝒅𝒊𝒏𝒈
Examples:
Compute for the future value.
2.𝑷 = 𝟔𝟎𝟎𝟎𝟎; 𝒊= 𝟒%;
𝒏 = 𝟓; 𝑸𝒖𝒂𝒓𝒕𝒆𝒓𝒍𝒚𝑪𝒐𝒎𝒑𝒐𝒖𝒏𝒅𝒊𝒏𝒈
Examples:
1. What will be the maturity value of
P 12,000 invested for 4 years at 15%
compounded quarterly?
Given:
𝑃= FV=
𝑖=
𝑚=
𝑛=
𝑁=
Examples:
2. What amount must be invested now
in savings account earning 9%
compounded quarterly to accumulate
𝟑
a total of P 21,000 after 𝟒 𝟒 years?
Given:
𝑃= FV=
𝑖=
𝑚=
𝑛=
𝑁=
Examples:
3. Salome paid P 8,600 on a loan made
2 years before at 6% compounded
bimonthly. Find the interest generated
Given:
𝑃= FV=
𝑖=
𝑚=
𝑛=
𝑁=