Compound Interest Lesson

Compound Interest

by JENNYLYN KHE

​Definition of Terms

​Compound Interest - interest that is computed on the principal and also on the accumulated past interests.

​Annually - means once a year (1 period)

​Semi-Annually - means twice a year (2 periods)

​Monthly - means every month in a year (12 periods)

​Quarterly - means every three months or 4 times a year (4 periods)

​Daily - means everyday in a year (365 periods)

Multiple Choice

What does P stand for in this formula? $$A=P\left(1\ +\frac{r}{n}\right)^{nt}$$  

• Rate

• The number of times compounded per year

• Final Amount

• Time

• Principal

Multiple Choice

What does r stand for in this formula? $$A=P\left(1\ +\frac{r}{n}\right)^{nt}$$  

• Rate

• The number of times compounded per year

• Time

• Principal

Multiple Choice

What does n stand for in this formula? $$A=P\left(1\ +\frac{r}{n}\right)^{nt}$$  

• Rate

• The number of times compounded per year

• Final Amount

• Time

• Principal

Multiple Choice

What does t stand for in this formula? $$A=P\left(1\ +\frac{r}{n}\right)^{nt}$$  

• Rate

• The number of times compounded per year

• Final Amount

• Time

• Principal

Multiple Choice

What does A stand for in this formula? $$A=P\left(1\ +\frac{r}{n}\right)^{nt}$$  

• Rate

• The number of times compounded per year

• Final Amount

• Time

• Principal

​Problem 1:

​Mrs. Santos invested Php 100,000.00 in a company that offers 6% interest compounded annually. How much will this investment be worth at the end of each year for the next five years?

​Problem 2:

Find the maturity value or final amount and the compound interest if

P = 10,000 is compounded annually at an interest rate of 2% in 5 years.

​Problem 3:

Mr. Ybanez aims to have his investment grow to P500,000 in 4 years. How much should he invest in an account that pays 5% compounded annually?

​Problem 4:

Mr. Isaac Nathaniel is thinking of investing an amount of P30,000 in a time deposit for 15 years. Find the future value if the investment offers 8.5% compounded quarterly.

Performance Task for Student 1

Performance Task for Student 2

Performance Task for Student 3