COMPOUND INTEREST - GE4 FINAL FOR EXAM.pptx

Material for Mathematics in the Modern World

1. COMPOUND INTEREST

2. Compound Interest Is a method of calculating interest periodically on the sum of the principal and the accumulated interest of previous periods.

3. Compound Interest Formula:

4. Finding Compound Interest Compound Interest (I) = A - P

5. Problem #1 Jane invests P5,000 in a savings account with an annual interest rate of 5%, compounded annually. How much interest will she earn after 3 years?

6. Problem #2 John borrows P20,000 at an annual interest rate of 6%, compounded monthly, for 4 years to her friend. How much interest will he need to pay?

7. Problem #3 Mike borrows P7,000 at an annual interest rate of 2%, compounded semi-annually, for 2 years. How much interest will he pay over the life of the loan?

8. Emily starts saving for retirement by investing P3,000 per year in an account with an annual interest rate of 7%, compounded annually. After 20 years, how much interest will she have earned on her contributions? Problem #4

9. David borrows P1,000 at an annual interest rate of 7 %, compounded weekly, for 2 years. How much interest will he pay over the life of the loan? Problem #5

10. Finding Principal Amount

11. Sarah wants to have P10,000 in her savings account in 5 years. The bank offers an annual interest rate of 4%, compounded annually. How much should she initially deposit in her account to reach her goal? Problem #6

12. John wants to have P50,000 for his child's college fund in 10 years. If he can invest in a bond with an annual interest rate of 6%, compounded semi-annually, how much does he need to invest today to achieve his goal? Problem #7

13. Lyster plans to retire in 25 years and hopes to have P1,000,000 saved by then. She invests in a retirement account with an annual interest rate of 7%, compounded quarterly. How much does she need to deposit now to reach her retirement goal? Problem #8

14. Problem #9 Alex and Maria are saving to buy their dream home in 8 years. They expect the house to cost P300,000 at that time. If they can invest their savings in a CD with an annual interest rate of 3.5%, compounded monthly, how much should they deposit today to afford the house?

15. Problem #10 Jude wants to expand his small business in 3 years and estimates that he'll need P50,000 for the expansion. If he can invest in a high-yield savings account with an annual interest rate of 5%, compounded annually, how much should he invest now to have the required amount in 3 years?

16. Finding Interest Rate

17. Problem #11 Robin invested P10,000 in a savings account, and after 3 years, he had P11,800 . What was the annual interest rate, compounded annually?

18. Problem #12 Sarah took out a loan for P15,000 and agreed to pay back P18,000 in 4 years. What was the annual interest rate on the loan, compounded annually?

19. Problem #13 Stephen invested P25,000 in a bond, and after 5 years, the investment had grown to P29,000 . What was the annual interest rate on the bond, compounded semi-annually ?

20. Problem #14 Roy wants to save P8,000 in 2 years, and she can invest in a certificate of deposit (CD). If she invests P7,000 today, what annual interest rate, compounded semi-annually, does she need to reach her savings goal?

21. Problem #15 Alice wants to have P500,000 in his retirement account in 20 years. If he can invest P300,000 today, what annual interest rate, compounded quarterly, does he need to achieve his retirement goal?

22. Finding Time

23. Problem # 16 Mia invested P5,000 in a savings account with an annual interest rate of 6%, compounded annually. If her investment grew to P6,750 , how many years did it take for this growth to occur?

24. Problem # 17 Rebecca wants to save P20,000 for a down payment on a house. She invests in a bond with an annual interest rate of 4%, compounded quarterly. How many years will it take for her investment to grow to P20,000 if she initially invests P15,000 ?

25. Problem # 18 Sam has P 50,000 and wants to invest it in a fund with an annual interest rate of 10%, compounded annually. How many years will it take for his investment to grow to P75,000 ?

26. Problem # 19 Jocelyn has P200,000 saved for retirement and wants to grow it to P500,000 . She invests in a retirement account with an annual interest rate of 6%, compounded annually. How many years will it take for her savings to reach her retirement goal?

27. Problem # 20 Gezell invested P2,000 in a savings account with an annual interest rate of 3%, compounded annually. If her investment grew to P5,500, how many years did it take for this growth to occur?