Compound Interest Rate
1. We are given that Rhianna wants to invest ₱50,000 to accumulate to ₱65,000 in 4 years with interest compounded semiannually.
2. The formula for compound interest is $$A = P\left(1 + \frac{r}{n}\right)^{nt}$$ where:
* $A$ = the amount after time $t$
* $P$ = principal amount
* $r$ = annual interest rate (decimal)
* $n$ = number of compounding periods per year
* $t$ = time in years
3. Substitute the values:
* $A = 65000$
* $P = 50000$
* $n = 2$ (because interest is compounded semiannually)
* $t = 4$
Using the formula:
$$65000 = 50000 \left(1 + \frac{r}{2}\right)^{2 \times 4} = 50000 \left(1 + \frac{r}{2}\right)^8$$
4. Divide both sides by 50000:
$$\frac{65000}{50000} = \left(1 + \frac{r}{2}\right)^8$$
$$1.3 = \left(1 + \frac{r}{2}\right)^8$$
5. Take the 8th root on both sides:
$$\left(1 + \frac{r}{2}\right) = 1.3^{\frac{1}{8}}$$
6. Calculate the 8th root:
$$1.3^{\frac{1}{8}} \approx 1.03308$$
7. Solve for $r$:
$$1 + \frac{r}{2} = 1.03308$$
$$\frac{r}{2} = 1.03308 - 1 = 0.03308$$
$$r = 0.03308 \times 2 = 0.06616$$
8. Convert to percentage:
$$r = 0.06616 \times 100 = 6.616\%$$
9. Rounding to two decimal places, the rate is approximately 6.62%.
10. Among the given options, the closest rate is 6.57% which is slightly less than our calculation, but the nearest correct choice by rounding is 6.67%.
Hence, the best answer is: Rhianna should invest her money at 6.67% compounded semiannually.