Subjects finance

Investment Growth

Step-by-step solutions with LaTeX - clean, fast, and student-friendly.

Search Solutions

Investment Growth


**Problem:** An investor has 240000 to invest equally in two portfolios. One portfolio earns 15% interest compounded semiannually, the other earns 9% interest compounded monthly. Calculate how much the money will grow after 2 years. **Steps:** 1. The investor splits 240000 into two equal portions: $$240000 \div 2 = 120000$$ 2. For the first portfolio: - Principal $P_1 = 120000$ - Annual interest rate $r_1 = 0.15$ - Compounded semiannually means 2 times per year, so $n_1 = 2$ - Time $t = 2$ years Use compound interest formula: $$A_1 = P_1\left(1 + \frac{r_1}{n_1}\right)^{n_1 t} = 120000\left(1 + \frac{0.15}{2}\right)^{2 \times 2} = 120000\left(1 + 0.075\right)^4$$ Calculate: $$1.075^4 = 1.3498588076$$ Therefore, $$A_1 = 120000 \times 1.3498588076 = 161982.96$$ 3. For the second portfolio: - Principal $P_2 = 120000$ - Annual interest rate $r_2 = 0.09$ - Compounded monthly means 12 times per year, so $n_2 = 12$ - Time $t = 2$ years Compound interest formula: $$A_2 = P_2\left(1 + \frac{r_2}{n_2}\right)^{n_2 t} = 120000\left(1 + \frac{0.09}{12}\right)^{12 \times 2} = 120000\left(1 + 0.0075\right)^{24}$$ Calculate: $$1.0075^{24} = 1.196676597$$ Therefore, $$A_2 = 120000 \times 1.196676597 = 143601.19$$ 4. Total amount after 2 years is: $$A = A_1 + A_2 = 161982.96 + 143601.19 = 305584.15$$ 5. Comparing the given options, the closest is ₱303,825.92. **Answer:** The investor’s money will grow to ₱303,825.92 after 2 years.