Question

Rico deposited ₱50,000 at the end of each year for 10 years in his savings account. If his bank paid 6 1/4% % interest compounded annually, find the future value of Rico’s account.

Answer 1

Given:

Principal, P= 50,000

Time, t = 10 years

Interest rate = 6¼% = 6.25% = 0.0625

Number of times compounded, n = annually = 1

Let's find the future value.

Apply the compound interest formula:

$A=P(1+\frac{r}{n})^{nt}$

Where:

A is the final amount or future value

r is the interest rate = 0.0625

n is number of compounding periods per unit of time = 1

t is the time in years = 1

P is the principal = 50,000

Thus, we have:

$\begin{gathered} A=50000(1+\frac{0.0625}{1})^{1\times10} \\ \\ A=50000(1.0625)^{10} \end{gathered}$

Solving further:

$A=91676.79$

Therefore, the future value of Rico's account is ₱91,676.79

ANSWER:

₱91,676.79