Question

If ₱10,000 will accumulate to ₱50,544.70 in 17 years, what is the interest rate compounded annually?

Answer 1

We will use the next formula

`A=P(1+r)^t`

Where A is the amount, P is the principal, r is the rate, t is the time

A=50544.70

P=10000

t=17

we substitute

`50544.70=10000(1+r)^(17)`

We need to isolate the r

`\begin{gathered} (50544.70)/(10000)=(1+r)^(17) \\ 5.05447=(1+r)^(17) \end{gathered}`

`\sqrt[17]{5.05447}=1+r`
`1.0999999-1=r`
`r=0.0999999=9.99999\text{ \% }\approx\text{10\%}`

ANSWER

The interest compounded annually is 10%