Answer to Question #311989 in Finance for Carlos James

Question

How much money will need to invest today if it will be compounded bi-monthly with the rate of 6 % and will be withdrawn in 3 years? The amount of money after three years is ₱35425.

Compute the total interest of a money worth ₱2500 after 7 months if is based on simple interest with the rate of 11%.

Find the amount of ₱13450 after 5 years if it will be considered compounded semi annually at the rate of 9%.

Answer 1

PRINCIPAL

Let the amount to invest (P) = P

Let the accrued amount (A) = 35425

The annual rate of interest (R) = 0.06

Let the compounded times (n) = 6

Let time in years (t) =3

$A= P(1+r/n)$^nt

$35425= P(1+0.06/6)$^(6*3)

$35425= P(1+0.01)$ ¹⁸

$35425= P(1.196147476)$

Therefore $P=(35425/1.196147476)$

P = 29615.91336

The amount required for investment in order to get an accrued amount of 35425 from a compound interest at a rate of 6% over three years is approximately 29615.91.

TOTAL INTEREST

Let the amount invested (P) = 2500

Interest rate (R) =11%

Time (T) = 7 months

Simple Interest = $P* ​ \frac{R}{100}*T$

$= 2500* ​ \frac{11}{100}* \frac{7}{12}$

= 160.4166667

Total simple interest is approximately 160.42.

ACCRUED AMOUNT

Principal (P)= 13450

Interest rate (R) = 9%

compounded times (n) = 10

Time (t) = 5

Let time in years (t) =3

$A= P(1+r/n)$^nt

$A= 13450(1+0.09/2)$^(2*5)

$A= 13450(1+0.045)$ ¹⁰

$A= 13450(1.552969422)$

Therefore $A=20887.43872$

The total accrued amount with a principal of 13450 with an interest rate 0f 9% per year compounded semi annually over 5 years will be approximately 20887.44.