Compounding More than

Once a Year

Finding interest rate and time

1. Find the maturity value if 20,000 is deposited in a bank at 2%
compounded quarterly for 5 years.
Given:
P = 20,000 i = 2 ( 0.02) t=5 m=4
Find: F
 (𝒎)
F= P(1+ 𝒊 )❑𝑚𝑡

= 20,000 ( 1+ ) ❑(4 ) (5)

= 20,000 ( 1 + 0.005 ) 20
❑

= 20,000 ( 1.005❑
) 20

= 20,000 ( 1.1049 )

F= 22,098
 (𝒎)
F= P(1+ 𝒊 )❑𝑚𝑡

= 20,000 ( 1+ ) ❑(4 ) (5)

= 20,000 ( 1 + 0.005 ) 20
❑

= 20,000 ( 1.005❑
) 20

= 20,000 ( 1.1049 )

F= 22,098
n=
log (F/P) 1
log (1+ 𝒊(𝒎))

= log ()
log (1+)
= log ( 1.167)
log (1.000208)
n = 742.560
t=
= 742.560
12
t = 61.88 years
 log (F/P)
n=
log (1+ )

= log ()
log (1+)
= log ( 1.167)
log (1.000208)
n = 742.560
t=
= 742.560
12
t = 61.88 years
n=
log (F/P) 2
log (1+ 𝒊(𝒎))

= log ()
log (1+)
= log ( 1.3)
log (1.06)
n = 4.503
t=
= 4.503
2
t = 2.25 years
 log (F/P)
n=
log (1+ 𝒊(𝒎))

= log ()
log (1+)
= log ( 1.3)
log (1.06)
n = 4.503
t=
= 4.503
2
t = 2.25 years
 1
j = (F/P)𝑛
-1 1
1
=() - 1 20

=( 1.5 ) 20
1

=(
= 1.0205 - 1
j = 0.0205

𝒊
(𝒎) =jm
= 0.0205 (2)
(𝒎) = 0.041 or 4.1%
𝒊
 1
j = (F/P)𝑛
-1

1
=() - 1 20

=( 1.5 ) 20
1

=(
= 1.0205 - 1
j = 0.0205

𝒊
(𝒎) =jm
= 0.0205 (2)
(𝒎) = 0.041 or 4.1%
𝒊
 1
j = (F/P) 𝑛
-1 2
1
40
= (2) - 1
= (
= 1.O175 - 1
j = 0.0175

𝒊
(𝒎)
=jm
= 0.0175 (4)
𝒊 = 0.07 or 7%
(𝒎)
 1
j = (F/P) 𝑛
-1
1
40
= (2) - 1
= (
= 1.O175 - 1
j = 0.0175

𝒊
(𝒎)
=jm
= 0.0175 (4)
𝒊 = 0.07 or 7%
(𝒎)