COMPOUND INTEREST1. If the sum of P12,000.00 is deposited in an account earning interest rate of 9%compounded quarterly, what will it become after 1 year?2. In the previous problem, what is the effective rate?3. What is the equivalent nominal interest rate if compounded monthly?4. How many years are required for P1,000.00 to increase to P2,000.00 if invested at 9% peryear compounded continuously?5. What payment X ten years from now is equivalent to a payment of P1,000.00 six yearsfrom now, if interest is 15% compounded monthly?6. An investment of P3,000,000.00 earns interest of 9% compounded continuously. What isthe effective rate of interest?7. What rate in percent compounded monthly is equivalent to 18% compounded semi-annually?8. When compounded bi-monthly, P150,000.00 becomes P223,183.00 after 5 years. Whatis the nominal rate of interest?

This pertains to compound interest. Compound interest accrues on both the initial principal as well…

1. If the sum of P12,000.00 is deposited in an account earning interest rate of 9% compounded quarterly, what will it become after 1 year? 2. In the previous problem, what is the effective rate? 3. What is the equivalent nominal interest rate if compounded monthly?

1. If the sum of P12,000.00 is deposited in an account earning interest rate of 9% compounded quarterly, what will it become after 1 year? 2. In the previous problem, what is the effective rate? 3. What is the equivalent nominal interest rate if compounded monthly?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 31P

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Question

COMPOUND INTEREST
1. If the sum of P12,000.00 is deposited in an account earning interest rate of 9%
compounded quarterly, what will it become after 1 year?
2. In the previous problem, what is the effective rate?
3. What is the equivalent nominal interest rate if compounded monthly?
4. How many years are required for P1,000.00 to increase to P2,000.00 if invested at 9% per
year compounded continuously?
5. What payment X ten years from now is equivalent to a payment of P1,000.00 six years
from now, if interest is 15% compounded monthly?
6. An investment of P3,000,000.00 earns interest of 9% compounded continuously. What is
the effective rate of interest?
7. What rate in percent compounded monthly is equivalent to 18% compounded semi-
annually?
8. When compounded bi-monthly, P150,000.00 becomes P223,183.00 after 5 years. What
is the nominal rate of interest?

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COMPOUND INTEREST 1. If the sum of P12,000.00 is deposited in an account earning interest rate of 9% compounded quarterly, what will it become after 1 year? 2. In the previous problem, what is the effective rate? 3. What is the equivalent nominal interest rate if compounded monthly? 4. How many years are required for P1,000.00 to increase to P2,000.00 if invested at 9% per year compounded continuously?
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