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General Mathematics
Compound Interest
Worksheet #1

Date:
Name:
Year and Section:

Word Problems

1. At what rate will ₱3,700 Given:

accumulate to ₱15,200 for 3 P= ₱ 3,700
years and 4 months, if F = ₱ 15,200
compounded every four t = 3 years and 4 months or 40 months (40/12)
months? n=3

Asked: r =?

Solution:

[( ) ]
1
F
r =(n) (n)(t)
−1 x 10 0
P

[( ) ]
1
15,200
r =3 (3 )(40 /12)
−1 x 10 0
3,700

r = 45.53 %

Answer: In three years and 4 months, the amount 3,700 pesos could
accumulate to 15,200 pesos at a rate of 45.53% when compounded every
four months.
2. How long will ₱9,000 Given:
accumulate to ₱15,000 at P = ₱ 9,000
6.25% rate compounded F = ₱ 15,000
every month? r = 6.25% or 0.0625
n = 12

Asked: t =?

Solution:
log ( F )−log ( P )
t=
r
(n)log (1+ )
n
log ( 15000 )−log ( 9000 )
t=
0.0625
( 12) log(1+ )
12

t= 8.19 years

Answer: It will take 8.19 years for an amount of 9,000 pesos to grow up to
15,000 pesos at 6.25% interest rate compounded monthly.

Worksheet #1 Compound Interest

3. How much should Paolo Given:
invest at 5.75% rate, F = ₱ 400,000
compounded every six r = 5.75% or 0.0575
months for 4 years and 6 t = 4 years and 6 months or 4.5 years
months to accumulate n = 12
₱400,000?
Asked: P =?

Solution:
F
P= (n)(t )
r
( 1+ )
n
400,000
P= (2)(4.5)
0.0575
( 1+ )
2

P = ₱309,935.52

Answer: Paolo should invest a principal amount of 309,935.52 pesos to

accumulate 400,000 pesos after 4 years and 6 months at a rate of 5.75%
to be compounded every six months.

4. Accumulate ₱20,000 for 2 Given:

years and 8 months at 8.5%, F= ₱ 20,000
compounded every 2 r = 8.5% or 0.085
months. t = 2 years and 8 months or 32 months (32/ 12)

Asked: P =?

Solution:
r −nt
P=F (1+ )
n
−(6 )(32/12)
0.085
P=20,000 (1+ )
6
P=20,000 (1. 014166667)−1 6

P = ₱15,969.11

Answer:
You should invest 15,969.11 pesos as your principal amount, for you to
accumulate 20,000 pesos in 2 years and 8 months with a rate of 8.5% and
compounded every 2 months.

5. Sheanon Louis deposited Given:

₱20,000 at 4.75% for 4 years P= ₱ 20,000
and 3 months. Determine r = 4.75% or 0.0475
the future value of the t = 4 years and 3 months or 51 months (51 /12)
deposit if the interest is n = a) 12
compounded a. Monthly b. b) 4
Quarterly c. Semi-annually c) 2

Asked: F =?

Solution:

a) Monthly
nt
r
F=P(1+ )
n
0.0475 (12)(51/12)
F=20,000(1+ )
12
F=20,000(1. 003958333)51

𝐹 = ₱24,464.15

Worksheet #1 Compound Interest

 b) Quarterly
nt
r
F=P(1+ )
n
0.0475 (4)(51 /12)
F=20,000(1+ )
12
F=20,000(1. 011875)17

𝐹 = ₱24,444.81

c) Semi-Annually
nt
r
F=P(1+ )
n
(2 )(51/12)
0.0475
F=20,000(1+ )
12
F=20,000(1. 02375)8.5

𝐹 = ₱24,416.21

Answer: If Sheanon Louis deposited a principal amount of 20,000 pesos

with the rate of 4.75% at a period of 4 years and 3 months, the future
values if the interest is compounded: a) monthly is 24,464.15 pesos, b)
quarterly is 24,444.81 pesos, and c) semi-annually is 24,416.21 pesos.

Briefly explain the difference between a “7% compounded monthly for a year” and a “7%
simple interest for a year.” If you are lending money, which interest would you prefer? Why?

Simple interest is determined on the loan's principle (or initial) amount. Compound interest is
computed using the principal amount as well as the accumulated interest from prior periods and is
hence known as "interest on interest."

Assuming I have a $10,000 principal amount. I calculated a simple interest rate of 7% a year and
came up with a total accrued amount of $10,700. Meanwhile, compound interest would result in a total
accumulated amount of $10,722.90.

To conclude, I would earn more on compound interest. I believe that compound interest is
preferable since it enables funds to grow at a faster rate than they would in a simple interest
account.

Worksheet #1 Compound Interest