Question

How much should you set aside and invest in a fund earning 10% compounded quarterly if you want to accumulate P200,000 in 3 years and 6 months?

Answer 1

Here A=200000

t=3.5 year

Rate r=10%

By using the formula of compound interest we have

$\begin{gathered} A=P\lbrack1+\frac{\frac{r}{4}}{100}\rbrack^{4t} \\ 200000=P\lbrack1+\frac{\frac{10}{4}}{100}\rbrack^{4\times3.5} \\ 200000=P\lbrack1.025\rbrack^{14} \\ P=\frac{200000}{1.41297382} \\ P=141545.4392 \end{gathered}$