Question

A man expects to receive Php 125,000 in eight years. How much is that money worth now considering an interest rate of 12% compounded monthly?

Answer 1

$A =P(1+\frac{r}{n})^{n×t}$

For compounded monthly n = 12

t = 8 years

r = 12%

A= Php 125,000

$125000 = P(1+\frac{0.12}{12})^{12×8}$

$125000=P(1.01)^{96}$

$125000=P(2.59927)$

$\frac{125000}{2.59927}=P\frac{2.59927}{2.59927}$

$P=Php 48090.43$

Money worth now is Php 48090.43