Answer to Question #289720 in Financial Math for Zia

Question

Hannah made a bank loan worth Php 200,550 with 5% interest compounded semi-annually (2 times in a year). If she is to pay at the end of the period only, how much will be the value of the loan after 2 years?

Answer 1

A= P ( 1 + i/n)^nt

^{A = Future Value}

^{P = Principal Amount}

^{i = interest rate}

^{n = Number of times compunded in a year}

^{t = time in years}

A= P ( 1 + i/n)^nt

P = 200,550

i = 5% p.a

n = 2 times

t = 2 years

A = 200,550 ( 1 + 0.05/2)^2*2

A = 200,550 ( 1 + 0.025)⁴

A = 221,370

Value of Loan After 2 years = Php 221,370