2. Problem
A man borrowed P 100,000 from a bank two
years at a certain interest rate. The bank
manager says the interest is compounded.
What does he mean?
3. Let’s break it down
• Compound interest for two years is the
interest of P100,000 for the first year plus
interest earned in the second year. The
principal for the 2nd year is the original
amount P 100,000 plus the interest earned
for the first year.
• Interest can be compounded annually,
semi-annually, semiannually, quarterly or
monthly.
4. PROBLEM 1
Mr. Salvador opened a P 10,000 three-year
savings deposit at MMM Bank. It has an
annual interest of 7% compounded annually.
Calculate the total amount of money (future
value) that Mr. Salvador will have at the end of
three years and the total compound interest.
5. PROBLEM 1
• Year 1 Interest = principal x rate x time
= 10, 000 x .07 x 1
= 700
• Year 2 Principal + Interest= 10,000 +700
= 10,700
Interest= 10,700 x 0.07 x 1
= 749
• Year 3 P10,700 +749= 11 449
11449 x 0.07 x 1= P801.43
6. PROBLEM 1
• FUTURE VALUE= 10,000 +700 + 749 +
801.43
• = 12, 250.43
• COMPOUND INTEREST (TOTAL)= Future
value- Original Principal
• = 12250.43-10,000
• =250.43
7. 1. P 10,000 invested at 8 % for 2 years,
compounded annually.
2. P 20,000 invested at 6% for 3 years,
compounded semi-annually.
3. P70 500 invested at 7% for 2 ½ years,
compounded quarterly.
4. P 75, 500 invested at 3% for 3 years,
compounded semi-annually
Find future value and total
compound interest
