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Find the amount on P6,850 in 3 years and U months et: a) 16°_, simple interest b) 16% compounded quarterly
Find the amount on P6,850 in 3 years and U months et: a) 16°_, simple interest b) 16% compounded quarterly
Expert Solution
Computation of Amount at 16% Simple Interest:
Amount = Principal + Interest
Here,
Simple Interest = Principal*Rate*Time
= 6,850*16%*3 years and 8 months
= 6,850*16%*(3+8/12)
= 6,850*16%*3.6667
Simple Interest = 4,018.67
Amount = 6,850+4,018.67 = 10,868.67
Computation of Amount at 16% compounded quarterly:
Amount = Principal*(1+Rate/Number of Compounding Periods)^Number of Periods
= 6,850*(1+16%/4)^(3 years* 4 quarters + 8 months or 2 quarters)
= 6,850*(1+4%)^14
Amount = 11,861.98
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