A MAN MADE A LOAN OF PHP 60,000 PAYABLE IN 3 YEARS AT 8% COMPOUNDED QUARTERLY WHAT IS THE PERIODIC INTEREST RATE?A. 2% B.4% C. 1.33% D. 8%
Question
A MAN MADE A LOAN OF PHP 60,000 PAYABLE IN 3 YEARS AT 8% COMPOUNDED QUARTERLY WHAT IS THE PERIODIC INTEREST RATE?
A. 2%
B. 4%
C. 1.33%
D. 8%
Solution
To find the periodic interest rate, we need to use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where: A = the final amount (PHP 60,000) P = the principal amount (PHP 60,000) r = the annual interest rate (unknown) n = the number of times interest is compounded per year (quarterly, so n = 4) t = the number of years (3 years)
We can rearrange the formula to solve for r:
r = ( (A/P)^(1/(nt)) - 1 ) * n
Substituting the given values:
r = ( (60000/60000)^(1/(4*3)) - 1 ) * 4 r = ( (1)^(1/12) - 1 ) * 4 r = ( 1 - 1 ) * 4 r = 0 * 4 r = 0%
Therefore, the periodic interest rate is 0%. None of the options A, B, C, or D are correct.
Similar Questions
Noah invested Php181,370 at 7% interest compounded quarterly for 10 years. How much is the compound interest at the end of the investment period?
You invest Php1,500 in a bank account that offers an annual interest rate of 3.5%, compounded quarterly. What will your balance be after 3 years?
Noah invested Php118,703 at 5% interest compounded quarterly for 1 years. What is the compound amount (future value) of his investment?
If you borrow N$150,000 for a house at an 8% compound annual interest rate for 30 years, what is your monthly payment?
What is the future value of $5000 invested at a 7% interest rate compounded quarterly for 3 years? a) $6144.57 b) $6215.23 c) $6300.00 d) $6405.12
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.