Answer to Question #178041 in Financial Math for Kim Galvez

Question #178041

Solve the following problems. Show your solutions to support your answer.

1. At what rate will ₱ 6,500 accumulate to ₱ 27,000 for 3 years and 6 months, if compounded every 5 

months?

2. Accumulate ₱ 25,000 for 2 years and 5 months at 6 ½%, compounded every two months.

3. Briefly explain the difference between a “ 7% compounded monthly for a year” and a “7% simple 

interest for a year.”



1
Expert's answer
2021-04-13T15:21:57-0400

1. Rate is "r=42\/5\u00d7((27,000\/6,500)^{1\/42} \u22121)=0.2897"

or 28.97%.

2. 25,000 for 2 years and 5 months at 6 ½%, compounded every two months is:

"FV = 25,000\u00d7(1 +0.065\/6)^{29\/2} = 29,227.63."

3. A “ 7% compounded monthly for a year” is "P\u00d7(1 + 0.07\/12)^{12}" and a “7% simple

interest for a year” is just P×1.07.


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