Nothing

Compounding

Formula:

FV = PV (FVIFi,n)

If P1,000 is invested today at the rate of 12% for 5 years compounded annually, what is the future value at the end of the 5th year?

1,000 x 1.762 = 1,762

Compounded semi-annually?

1,000 x 1.791 = 1,791

Compounded quarterly?

1,000 x 1.806 = 1,806

What will a deposit of P4,500 at 10% compounded semi-annually be worth if left in the bank for six years?

4,500 x 1.796 = 8,082

What will a deposit of P6,000 at 12% compounded monthly be worth at the end of 2 years?

6,000 x 1.270 = 7,620

What will a deposit of P4,500 at 10% compounded semi-annually be worth if left in the bank for six years?

4,500 x 1.796 = 8,082

What will a deposit of P6,000 at 12% compounded monthly be worth at the end of 2 years?

6,000 x 1.270 = 7,620

Plan to buy additional equipments worth P20,000. Available money is P7,752 to be invested at 9% compounded annually. How many years will it take for the initial investment to grow to P20,000?

How many years will the following take?

a. P500 to grow to P1,039.50 if invested at 5% compounded annually.

b. P53 to grow to P78.76 if invested at 2% compounded annually.

Your company plans to buy laptop worth P20,000. However, available fund is only P11,167. At what rate must the P11,167 be compounded annually to grow to P20,000 in 10 years?

At what annual rate would the following have to be invested?

a. P300 to grow to P422.10 in 7 years?

b. 50 to grow to P280.20 in 20 years?

ANNUITY

* series of equal peso payment/receipt for a specified period of time.

Compound annuity

– paying or investing an equal sum of money at the end of each period for a certain number of periods and allowing it to grow.

FV = PMT(FVIFAi,n)

PMT – annuity payment deposited or received at the end of each year.

Deposit of P500 each year for 5 yrs at 6% interest compounded annually.

What is the accumulated sums of the...