Question

Tenten deposited P10000 in the bank which gives 1% compounded quarterly and let it stay there for 5 years.find the maturity value and interest.

Answer 1

Given :-

• Sum deposited = P10,000
• Rate = 1 % compounded quarterly .
• Time = 5 years.

To Find :-

• Maturity value and interest .

Solution :-

we know that,

• when rate is compounded quarterly, time becomes 4 times and rate is divided by 4 .
• Maturity value = sum deposited[ 1 + (Rate/100)]^(time)
• Interest = Maturity value - sum deposited .

so,

• Sum deposited = P10,000
• Time = 5 * 4 = 20 years.
• Rate = (1/4)% per annum.

then,

→ Maturity value = 10000[ 1 + (1/4*100) ]²⁰

→ Maturity value = 10000[ 1 + (1/400) ]²⁰

→ Maturity value = 10000 * (401/400)²⁰

→ Maturity value = 10000 * 1.05

→ Maturity value = P10,500 .

therefore,

→ Interest = 10500 - 10000 = P500.

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