Term 3 · Week 1 · Compound Interest

Standard problem

Standard

A digital bank pays 4% per year compounded monthly. Find the value of ₱10,000 after one year, to the nearest centavo.

Show step-by-step solution

Answer: 10407.42 ₱

Monthly rate $i = 0.04/12$ ; $n = 12$ .
$A = 10{,}000\left(1+\dfrac{0.04}{12}\right)^{12} \approx 10{,}000 \times 1.040742$ .
$A \approx 10{,}407.42$ pesos, slightly more than the ₱10,400 from annual compounding.

Budget of Work competencies

gm11.t3.w1.c1
Solve problems involving compound interest, including maturity value, future value, nominal rates, and number of terms.