A teacher saves P5,000 every 6 months in the bank that pays 0.25% compounded monthly. How much will be her savings after 10 ears

Question

3 years ago

10

?

1 answer:

Kazeer [188] · Answer 1 · 2022-08-07T17:54:34+03:00

Answer: $101,197

Explanation:

First find the periodic interest rate for 6 months because the rate is per year.

= 0.25% / 2

= 0.125%

There are 2 semi annual periods in a year so in 10 years:

= 2 * 10

= 20 periods

Use future value of annuity formula:

= Amount * ((1 + rate)^periods - 1) / rate

= 5,000 * (( 1 + 0.125%) ²⁰ - 1) / 0.125%

= $101,196.45

= $101,197