SOLUTION: A man invested Php 130,000 at an interest rate of 10% compounded annually. What will be the final amount of his investment in terms of today's peso after 5 years if inflation remai

Question 1172775: A man invested Php 130,000 at an interest rate of 10% compounded annually. What will be the final amount of his investment in terms of today's peso after 5 years if inflation remains the same at the rate of 8% per year?
Please show the solution.
Answer by ikleyn(52810) (Show Source): You can put this solution on YOUR website!
.

I solve this problem in two steps :

1)  Without accounting for inflation,  Php 130,000 compounded annually at 10% annual interest rate become


         = 209,366.30 today's peso.



2)  Accounting for 8% average annual inflation, these 209,366.30 peso actually will be equivalent only


         = 142,491.19 today's peso.    ANSWER

Solved.

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