John Paul B.

Valencia
Block-G
General Mathematics

Problem:
1. Mr. Valencia applied for a home improvement loan worth Php 100,000 through PAG-IBIG
at an interest rate of 10% per annum and payable in 5 years. How much is the total amount
to be paid?

Solution:
To answer this question, we first must understand that this is an example of a compound
interest which can be solved using exponential and log function.

Compound Interest
The formula of the interest that will be compounded can expressed in

= (1 + )

Where:
F represents the amount of money after a certain amount of time.
P represents the principle or the amount of money you would borrow
r represents the interest rate
n represents the number of times an interest is compounded in one year
t represents the amount of time in years

We will solve the problem using the function:

.10 15
() = ( + ) (5) = 100,000 (1 + ) We can also use log to check if the
1

P = Php 100,000 (5) = 100,000 (1.1)5 exponent is correct.

r = 10% or .10 (5) = 161,051.00 log (1+ ) () =

n=1
t = 5 years 161,051
(1.1) (100,000) = 5
Final answer:
Using the formula, I was able to get the answer of Php 161,051.00 which is the total amount that
will be paid.

Valuing:
Exponential function is a great way for me to gain knowledge on how to get through solving
compound interest. It enabled me to calculate how much a person is supposed to pay in total in a
given amount of time in the aspect of compound interest. Through the inverse ( log function), It
helped me check if the exponent is correct so that I would be sure of money being paid. Having
the knowledge in learning exponential function and logarithmic function can certainly help a
person in dealing with problems like this.