Question

6. Bob deposited ₱25,000 in a new savings account at 6% interest compounded semiannually.

At the beginning of year 3, Bob deposits an additional ₱35,000 at 8% interest compounded semiannually. At the end of 4 years, what is the balance in Bob's account?

Answer 1

Compound interest

$$P=P_0(1+\dfrac{r}{n})^{nt}$$

Bob deposited ₱25,000 in a new savings account at 6% interest compounded semiannually.

At the end of 4 years

$$P_1=25000(1+\dfrac{0.06}{2})^{2(4)}=31669.2520$$

At the beginning of year 3, Bob deposits an additional ₱35,000 at 8% interest compounded semiannually.

At the end of 4 years

$$P_2=35000(1+\dfrac{0.08}{2})^{2(2)}=40945.0496$$

$$P=P_1+P_2=31669.2520+40945.0496$$

$$=72614.30$$

At the end of 4 years, the balance in Bob's account is $₱72,614.30.$