Question

General MathematicsProblem:How much should you set aside and invest in a fund earning 10% compounded quarterly if you want to accumulate ₱200,000 in 3 years and 6 months?

Answer 1

ANSWER:

₱ 141545.4

STEP-BY-STEP EXPLANATION:

We need to find the amount of money that must be invested to accumulate 200,000 in 3 years and 6 months. We use the following formula to calculate the principal amount P.

Since, the investment is made for 3 years and 6 months (3.5 years) therefore the formula for the compound interest compounded quarterly is:

$A=P\mleft(1+\frac{\frac{r}{4}}{100}\mright)^{4t}$

Replacing:

A = 200000

r = 10%

t = 3.5 years

$\begin{gathered} 200000=P\mleft(1+\frac{\frac{10}{4}}{100}\mright)^{^{4\cdot3.5}} \\ P=\frac{200000}{\mleft(1+\frac{2.5}{100}\mright)^{^{4\cdot3.5}}} \\ P=141545.4 \end{gathered}$

Hence, the amount of money to invest is ₱ 141545.4