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At certain interest rate compounded quarterly, P1,000 will amount to P4

Economics Aug 08, 2020

At certain interest rate compounded quarterly, P1,000 will amount to P4.500 in 15 years. What is the amount at the end of 10 years?

Select one:

a. P2,825.70

b. P2,725.70

c. P2,525.70

d. P2,625.70

Expert Solution

First we calculate using Rate Function in Excel:

=rate(nper,pmt,-pv,fv)

Here,

Rate = Interest Rate = ?

Nper = 15 Years

PMT = 0

PV = 1,000

FV = 4,500

Substituting the values in formula:

=rate(15,0,-1000,4500)

Rate or Interest Rate = 10.55%

Now we calculate Amount at the end of 10 years:

Amount = Principal*(1+Rate)^Time

= 1,000*(1+10.55%)^10

Amount = 2,725.68 or 2,725.70

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