This about compound interest

Quantitative Finance Level 2

Accumulate ₱7500 for 13 years at 7% compounded quarterly. Find the compound interest at the end of time. Choose the nearest answer.

₱7986 ₱10986 ₱13986 ₱17641

Marvin Kalngan by Marvin Kalngan , 38, Philippines

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1 solution

Principal = ₱ 7500 ₱7500

Compound interest is compounded quarterly ⟹ \implies Conversion % = R % = 7 4 % = 1.75 % \% = R \% = \dfrac{7}{4} \% = 1.75 \% .

Number of conversion periods = n = 13 × 4 = 52 = n = 13\times 4 =52

Compound interest = P ( ( 1 + R 100 ) n − 1 ) =P((1+\dfrac{R}{100})^n- 1)

Compound interest = ( ₱ 7500 ( 1 + 1.75 100 ) 52 − 1 ) =( ₱7500(1+\dfrac{1.75}{100})^{52} -1)

Compound interest = ( ₱ 7500 ( 101.75 100 ) 52 − 1 ) =( ₱7500(\dfrac{101.75}{100})^{52} -1)

Compound interest ≈ ( ₱ 7500 ( 2.46484566109 − 1 ) \approx( ₱7500(2.46484566109 -1)

Compound interest ≈ ( ₱ 7500 ( 1.46484566109 ) = 10986.3424582 \approx( ₱7500(1.46484566109) = 10986.3424582

Compound interest ≈ ₱ 10986 \approx\boxed{ ₱10986}

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