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1 vote
If you invest Php 10,000 at an 8% annual interest rate compounded annually, how much will you earn in two years?

a. Php 11,664
b. Php 11,200
c. Php 10,800
d. Php 10,640

1 Answer

3 votes

Final answer:

To find the future value of Php 10,000 invested at an 8% annual interest rate compounded annually for two years, you use the compound interest formula resulting in Php 11,664 after two years.

Step-by-step explanation:

The question is about calculating the future value of an investment with compound interest. Given an initial investment of Php 10,000 at an annual interest rate of 8% compounded annually, to find the amount after two years, we can use the formula:

A = P(1 + r/n)nt

Where:

  • A represents the amount of money accumulated after n years, including interest.
  • P is the principal amount (the initial amount of money).
  • r is the annual interest rate (decimal).
  • n is the number of times that interest is compounded per year.
  • t is the time the money is invested for, in years.

Substituting the given values into the formula, we get:

A = 10,000(1 + 0.08/1)1*2 = 10,000(1 + 0.08)2 = 10,000(1.08)2 = 10,000 * 1.1664 = Php 11,664

Choice a. Php 11,664 is the correct answer.

User Hatboyzero
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