Additional Activity : Compound Interest
Supposed that a local farmer wants to borrow money from Landbank of the
Philippines to start the organic farming in his one (1) hectare of agricultural
land. The farmer needs P150,000.00 as start-up capital. The bank offers him
10% interest rate compounded annually. Compute for the total amount to be
paid every year for 5 years.
Show your answer in tabular form.
Time Principal Interest Solution Answer Maturity Value
(Principal + Answer)
1 150,000 10% (150,000)(10%)(1) 15,000 150,000+15000=165,000
2 150,000 10% (165,000)(10%)(1) 16,500 165,000+16500=181,500
3 150,000 10% (181,500)(10%)(1) 18,150 181,500+18,150=199,650
4 150,000 10% (199,650)(10%)(1) 19,965 199,650+19,965=219,615
5 150,000 10% (219,615)(10%)(1) 21,961.50 219,615+21,961.50=241,576.50
answer : 241,576.50
Supposed that a local farmer wants to borrow money from Landbank of the
Philippines to start the organic farming in his one (1) hectare of agricultural
land. The farmer needs P150,000.00 as start-up capital. The bank offers him
10% interest rate compounded annually. Compute for the total amount to be
paid every year for 5 years.
Show your answer in tabular form.
Time Principal Interest Solution Answer Maturity Value
(Principal + Answer)
1 150,000 10% (150,000)(10%)(1) 15,000 150,000+15000=165,000
2 150,000 10% (165,000)(10%)(1) 16,500 165,000+16500=181,500
3 150,000 10% (181,500)(10%)(1) 18,150 181,500+18,150=199,650
4 150,000 10% (199,650)(10%)(1) 19,965 199,650+19,965=219,615
5 150,000 10% (219,615)(10%)(1) 21,961.50 219,615+21,961.50=241,576.50
answer : 241,576.50
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Answer:
Compound Interest Formula
A = P( 1+r/n)^(nt)
NOTE: ^ means to the power of
P = 150,000.00
r = 10/100 = 0.1 ( decimal )
n = 12
t = 5
A = 150,000.00(1+0.10/12)^(12(5))
TOTAL = 246,796.34
A=P(1 + rt)
=150,000 (1+0.10)^5 [ NOTE: ^ means to the power of ]
= 241,576.50