Name: Lance G.

Alcaraz Activity: Problem Set 2

5 POINTS EACH. Answer the following problems and submit it in Word or PDF format.
Write/type your complete solutions with Given information from the problem.

1. If P20,000 is invested in a fund that pays 10% compounded annually, how much money
will be in the fund after 3 years?
Given: P = ₱20,000; j = 10%; t = 3 years; m = 1; F = ?
n = (3)(1) = 3
i = .1 /1 = .1
F = 30,000(1+.1)^3 = 26620
Final Answer: ₱20,000 after 3 years at 10% interest compounded annually is ₱26620.

2. Accumulate P30,000 for 3 years and 6 months at 16% compounded semiannually.

Given: P = ₱30,000; j = 16%; t = 3.5 years; m = 2; F = ?
n = (3.5)(2) =
i = .16 /2 = .08
F = 30,000(1+.08)^7 = 51414.73
Final Answer: ₱30,000 after 3.5 years at 16% interest compounded semi-annually is ₱51414.73

3. What is the compound amount after you invest P22,350 for 5 years and 6 months at 5%
compounded semiannually?
Given: P = ₱22,350; j = 5%; t = 5.5 years; m = 2; F = ?
n = (5.5)(2) = 11
i = .05 /2 = .025
F = 22350(1+.025)^11 = 29325.14
Final Answer: The compound amount after investing ₱22,350 with a 5% interest compounded
semi-annually after 5.5 years is ₱29325.14

4. What is the (a) present value and (b) compound interest earned for 3 years and 9
months of P84,500 that is compounded quarterly at 20% interest?
Given: t = 3.75 years; F = ₱84,500; j = 20%; m =4; Ic = ?; P = ?
n = (3.75)(4) = 15
i = .2 /4 = .05
P = 84500(1+.05)^-15 = 40645.9447
Ic = 84500 - 40645.9447 = 43854.06
Final Answer: The present value of ₱84,500 at 20% interest when compounded quarterly is
₱40645.95 while its compound Interest earned is ₱43854.06
 5. Find the nominal rate which when compounded semiannually and applied to a P50,000
principal will earn an interest of P5,000 after 60 months.
Given: P = ₱50,000, Ic = ₱5,000; t = 5 years; m = 2; j = ?
F = 50,000 + 5000 = 55,000
n = (5)(2) = 10
j = 2[(55000/50000)^1/10 -1] = 0.01953 = 1.95%
Final Answer: The nominal rate of ₱50,000 to earn ₱5000 after 60 months is 1.95%.

6. In how many months will P10,000 earn a compound interest of P2,000 if money is worth
12% compounded monthly?
Given: P = ₱10,000; Ic = ₱2,000; j = 12%; m = 12; t = ?
i = .12 / 12 = .01
F = 10,000 + 2,000 = 12000
t = log(12000/10000) / 12log(1+.01) = 1.5 years = 18 months
Final Answer: The principal With a 12% interest, ₱10,000 will be ₱12,000 in around 18 months.

7. What effective rate is the equivalent to 15% compounded annually?

Given: j = 15%;6 m = 1; w = ?
w = (1+(.15/1))^1 -1 = 0.15
w = 15%
Final Answer: The effective rate equivalent to the 15% nominal rate is also 15% when
compounded annually.