document.write( "Question 1172999: At what rate, compounded monthly should P25, 000 be deposited in a bank to gain an interest of P4,500 in 3 years? \n" ); document.write( "

Algebra.Com's Answer #798308 by ikleyn(52786) $\"\"$ $\"About$

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\n" ); document.write( "At what rate, compounded monthly should P25,000 be deposited in a bank to gain an interest of P4,500 in 3 years?
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\n" ); document.write( "\n" ); document.write( "            It is one of the typical problems on periodically compounded account,
\n" ); document.write( "            but slightly changed/modified comparing with traditional formulation.\r
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\n" ); document.write( "\n" ); document.write( "            So, my first step is to convert the problem to its traditional form.\r
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\n" ); document.write( "\n" ); document.write( "            To convert it, notice that having the principal of P25,000 and gaining the interest of P4,500 \r
\n" ); document.write( "\n" ); document.write( "            MEANS that the Future Value is   P25,000 + P4,500 = P29,500.\r
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\n" ); document.write( "\n" ); document.write( "            So, now we have this traditional formulation\r
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document.write( "           |   Find the nominal annual rate at which the principal P25,000  |\r\n" );
document.write( "           |   compounded monthly becomes P29,500 in 3 years ?              |\r\n" );
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\n" ); document.write( "\n" ); document.write( "Now this standard problem is EASY to SOLVE.\r
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document.write( "    29500 = \r\n" );
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document.write( "     = \r\n" );
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document.write( "     = 1.18\r\n" );
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document.write( "     =  = 0.001997\r\n" );
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document.write( "      =  = 1.004609.\r\n" );
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document.write( "          = 1.004609 - 1 = 0.004609\r\n" );
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document.write( "        r    = 12*0.004609 = 0.055308 = 0.055 (rounded) = 5.5%.    ANSWER\r\n" );
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document.write( "CHECK.   = 29500.84.   Good enough.\r\n" );
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\n" ); document.write( "\n" ); document.write( "Solved.\r
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