Question

In: Finance

Kabo saved P10, 000 with FNB for 5 years earning an interest rate of 10% per...

  1. Kabo saved P10, 000 with FNB for 5 years earning an interest rate of 10% per annum. Calculate the amount of money Kabo will receive at the end of 5 years:
  1. If simple interest was used?
  2. If compound interest was used?

Solutions

Expert Solution

Question i

Interest in case of simple interest=Principal*rate/100*number of years=10000*10/100*5=P 5000

Total amount receivable after 5 years=Principal + Interest=P10000+5000=P 15000

Question ii

Amount receivable in case of compound interest=Principal*(1+interest)^number of years

= P 10000*(1.1)^5 = P 10000*1.61051= P 16,105.1


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