Professional Documents
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Exercises
1. Find the amount in 6 years if Php25,000.00 is
invested at 16% compounded semi annually in
the first 4 years and at 14% compounded
quarterly in the last 2 years.
2. A man invested Php150,000.00 for 10 years.
How much will be the final amount at the end of
10 years if the interest rate is 14% compounded
quarterly for the first 3 years, 12% compounded
semi annually for the next 4 years and 11%
compounded quarterly for the remaining 3
years.
3. Vince deposited Php100,000.00 in a bank that
gives 14% interest converted quarterly. How
much money would she have in 7 years and 6
months if the interest rate increased to 15%
converted quarterly 4 years later?
4. Find the accumulated amount if Php200,000.00
is invested at 15% converted semi annually for 5
years and then changed it to 14.5% converted
quarterly for the last two years.
5. An investment of Php300,000.00 earns 15%
effective for 2 years, then 14% compounded
semi-annually for 2 more years, then 13%
compounded quarterly for another 1 year. Find
the amount at the end of 5 years.
6. Paul made a deposit of Php250,000.00 in a bank
at 15% effective for 3 years, and then changed it
to 14% converted quarterly for the last 2 years.
Find the accumulated amount in 5 years.
7. On January 1, 2010 Carl invested
Php500,000.00. How much will she have in 5
years, if the 16% interest converted semi
annually is in effect until April 1, 2012 and 15%
converted quarterly in the remaining years?
8. Php50,000.00 was invested for 6 years. During
the first 2 years, the interest rate was 12.5%
Continuous compounding
In
actual
business
practice,
continuous
compounding is seldom practiced, although some
banks and savings and loan associations try to
attract depositors by advertising frequent
compounding like the Interest araw-awar
advertisement. Daily compounding may make a
good advertising copy but does not mean much to
the depositors in terms of income as shown on the
table below.
Nominal rate, j
(at 5%
compounded)
Annually
Semi annually
Quarterly
Monthly
Weekly
Daily
Hourly
Continuous
Frequency of
conversion
A years interest
on Php10,000
1
2
4
12
52
365
8760
Continuously
Php 500.00
506.25
509.45
511.62
512.46
512.67
512.71
512.71
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Amount of
Php10,000 at the
end of 1 year
10,500.00
10,506.25
10,509.45
10,511.62
10,512.46
10,512.67
10,512.71
10,512.71
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Exercises:
1. Find the accumulated value of Php50,000 at the
end of 5 years if it is invested at 12% converted
continuously.
2. Find the present value of Php90,000.00 due in 4
years at 10% converted continuously.
3. Find the present value of Php190,000.00 due in
5 years if money is worth 14% compounded
continuously.
4. If Php28,500.00 is the amount at the end of 4
years, find its present value if it was invested at
11.5% compounded (a) semi annually, 9b)
quarterly, (c) monthly and (d) continuously.
5. If money is worth 14% find the final compound
amount if it is compounded continuously for 2
years.
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Exercises
1. How long will it take Php20,000.00 to amount
to Php35,000.00 at 9% compounded quarterly?
2. What nominal rate, j, converted annually was
the interest if Php100,000.00 accumulates to
Php200,000.00 in 10 years?
3. A man invested Php150,000.00 on his childs
birth. If he wishes to double the amount he
invested after 7 years, at what rate converted
quarterly should he invest?
4. If Php40,000.00 accumulates to Php100,000.00
in 6 years, find the nominal rate converted semi
annually.
5. For the sum of money to double itself in 15
years, what must be the rate of interest
converted annually?
6. If Php50,000.00 earned an interest of
Php10,000.00 in 2 years, what must be the
interest rate converted monthly in which the
money was invested?
7. What nominal rate converted semi annually will
make
Php200,000.00
accumulate
to
Php500,000.00 in 8 years?
8. If php100,000.00 amounts to Php140,000.00 in
5 years with interest compounded quarterly,
what is the nominal rate of interest?