1. The document contains 5 examples calculating compound interest on investments and loans over various time periods and interest rates compounded annually, quarterly, semi-annually, and monthly.
2. It shows how to calculate future and present values, as well as monthly loan payments and loan amortization schedules.
3. The examples illustrate the impact of differences in interest rate, compounding frequency, time, and payment amounts on the overall amount for investments to grow or loans to be repaid over time.
1. The document contains 5 examples calculating compound interest on investments and loans over various time periods and interest rates compounded annually, quarterly, semi-annually, and monthly.
2. It shows how to calculate future and present values, as well as monthly loan payments and loan amortization schedules.
3. The examples illustrate the impact of differences in interest rate, compounding frequency, time, and payment amounts on the overall amount for investments to grow or loans to be repaid over time.
1. The document contains 5 examples calculating compound interest on investments and loans over various time periods and interest rates compounded annually, quarterly, semi-annually, and monthly.
2. It shows how to calculate future and present values, as well as monthly loan payments and loan amortization schedules.
3. The examples illustrate the impact of differences in interest rate, compounding frequency, time, and payment amounts on the overall amount for investments to grow or loans to be repaid over time.
1. The document contains 5 examples calculating compound interest on investments and loans over various time periods and interest rates compounded annually, quarterly, semi-annually, and monthly.
2. It shows how to calculate future and present values, as well as monthly loan payments and loan amortization schedules.
3. The examples illustrate the impact of differences in interest rate, compounding frequency, time, and payment amounts on the overall amount for investments to grow or loans to be repaid over time.
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1. Suppose 100,000 is deposited in a bank for 5 years.
How much is the value after 5
years if it is invested at a) 8% simple interest
100,000(1+.08(5)) = 140,000
b) 8% compounded annually
100,000(1+.08)^5 =146,932.8077
c) 8% compounded quarterly
100,000 (1+.08/4)^ 20 = 148,594.7396
2. How much should be deposited now if you want to have P100,000 after 10 years if the rate is 5% compounded semi-annually?
100000(1+.05/2)^-20 = 61,027.09
3. Mr Santos purchased a car worth 1,000,000. His downpayment is 50% of the cash price.
How much is the monthly payment if the interest rate is 12% compounded monthly if he wants to pay for 5 years?
500,000 .12 −60 1− 1+( 12 ) = 11,122.22384 .12 12
4. How much is the amount of the loan if the payments are 100 quarterly for 5 years and the interest rate is 10% compounded quarterly?
.10 −20 1−(1+ ) 4 100( )= 1,558.92 .10 4
5. Make an amortization schedule for this loan. A loan of 10,000 is to be paid
annually for 5 years with a rate of 8% compounded annually. Period R Amount of Amount to Outstanding Interest pay the Balance Principal 0 10,000 1 2504.56 800 1704.56 8295.44 2 2504.56 663.64 1840.92 6454.52 3 2504.56 516.36 1988.2 4466.32 4 2504.56 357.31 2147.25 2319.07 5 2504.56 185.53 2319.03 0.04
