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    Genmath

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    Candia, Shyn Necole R.
    The document covers compound interest, presenting definitions, formulas, examples, and exercises related to calculating future values, interest rates, times, and conversions for principal amounts earning interest that compounds more than annually. Examples demonstrate using the compound interest formulas to solve for unknown values like time, rate, or amount given other known factors.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Genmath

    Uploaded by

    Candia, Shyn Necole R.
    44 views23 pages
    The document covers compound interest, presenting definitions, formulas, examples, and exercises related to calculating future values, interest rates, times, and conversions for principal amounts earning interest that compounds more than annually. Examples demonstrate using the compound interest formulas to solve for unknown values like time, rate, or amount given other known factors.

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    genmath

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    The document covers compound interest, presenting definitions, formulas, examples, and exercises related to calculating future values, interest rates, times, and conversions for principal amounts earning interest that compounds more than annually. Examples demonstrate using the compound interest formulas to solve for unknown values like time, rate, or amount given other known factors.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    44 views23 pages

    Genmath

    Uploaded by

    Candia, Shyn Necole R.
    The document covers compound interest, presenting definitions, formulas, examples, and exercises related to calculating future values, interest rates, times, and conversions for principal amounts earning interest that compounds more than annually. Examples demonstrate using the compound interest formulas to solve for unknown values like time, rate, or amount given other known factors.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 23

    Finding Interest Rate and Time

    in Compound Interest
    Reporters

    Scyrish JF Hanna Kyla


    RECALL
    The amount of money borrowed
    or invested on the origin date
    Principal (P)
    The amount after t years, that the
    lender receives from the borrower
    on the maturity value
    Maturity value or future
    value (F)
    i m Nominal Rate

    m Frequency of conversion

    j Rate of interest each


    conversion
    Total number of
    n conversion period
    It is the exponent or power to

    which a base must be raised to

    yield a given number


    Logarithm
    FORMULAS
    Compounding more than once a
    F=P(1+j) t
    year
    The rate for each conversion period
    j=i /m
    m
    (j)
    Total number of conversion period
    n=mt
    (n)
    LESSON OUTLINE
    1. Interest and time in compound
    interest
    2. Equivalent interest rate
    Example 1:
    How long will it take 3,000php to
    accumulate to 3,500php in a bank
    savings account at 0.25%
    compounded monthly?
    P = 3,000
    F = 3,500
    i(m) = 0.25% or 0.0025
    m = 12
    Example 2:
    How long will it take 1,000php to
    earn 300php if the interest is 12%
    compounded semi-annually?
    CAUTION
    The value of n, which refers to the number
    of periods, should be a whole number.
    Thus, in the previous example, we used
    n=5 rather than n=4.503 to compute for t.
    Example 3:
    At what nominal rate compounded
    semi-annually will 10,000php
    accumulate to 15,000php in 10 years?

    F = 15,000
    P = 10,000
    t = 10
    m=2
    Example 4:
    At what interest rate compounded
    quarterly will money double itself in
    10 years?
    Definition of terms

    Equivalent rates - two


    annual rates with different
    conversion periods that will
    earn the same compound
    amount at the end of a given
    number of years.
    Definition of terms

    Nominal rate - annual


    interest rate (may be
    compounded more than
    once a year)
    Definition of terms

    Effective rate - the rate


    compounded annually that
    will give the same
    compound amount as a
    given nominal rate; denoted
    by i(i)
    Example 5:
    What effective rate is equivalent to
    10% compounded quarterly?

    i = 0.10
    m

    m=4
    When solving for an
    equivalent rate j, six or
    more decimal places are
    recommended.
    Example 6:
    Seatwork 1:
    (a) F = 2,000, P = 1,750, m = 2,
    t = 4, j = ?, i(m) = ?
    (b) F = 100,000, P = 10,000,
    t = 8, money is compounded monthly,
    i = ?, j = ?
    (m)
    Seatwork 1:
    (c) F = 30,000, P = 10,000,
    im = 16% compounded quarterly, j = ?,
    n = ?, t = ?
    (d) F = 18,000, P = 12,000,
    i = 12%, compounded semi-annually,
    m

    j = ?, n = ?, t = ?
    Seatwork 2:
    Seatwork 3:
    (a) What is the nominal rate of interest if
    P4,000 accumulates to P10,000 in 8 years with
    interest
    compounded quarterly?
    (b) At what nominal rate compounded semi-
    annually will P5000 amount to P6000 in 2
    years?
    (c) What rate compounded annually will
    double an amount of money in 3 years?
    Seatwork 3:
    (d) In how many years will it take P18,000
    accumulate to P20,000 when deposited in a
    savings
    account that earns 0.250% compounded
    monthly?
    (e) How long will a principal double when
    invested at 10% compounded semi-annually?

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