Find a partner and decide which of you will interview a person having an experience below: When is compound interest your friend? When is compound interest your enemy? Present data or computation of the interest earned. Collaborate with each other, then individually make a reflection about compound interest. Upload your work here in the dropbox.
Answer (1)
Compound interest is my friend when I invest money in the bank or stock market, because the interest I earn keeps growing on top of the previous interest. For example, kung nag-invest ako ng ₱10,000 sa 5% annual interest compounded yearly for 3 years ganito ang makukuha ko. A = P(1 + r)^t A = 10,000(1 + 0.05)^3 A = 10,000(1.157625) A = ₱11,576.25Kumita ako ng ₱1,576.25 na hindi ko kailangang pagtrabahuan.Pero compound interest becomes my enemy kapag ako ay may utang sa credit card na may mataas na interest. Halimbawa, kung may balanse akong ₱10,000 sa 20% annual interest. Ganito ang mangyayari.A = 10,000(1 + 0.20)^3 A = 10,000(1.728) A = ₱17,280Sa loob lang ng 3 taon, halos madodoble ang utang ko kung hindi ko binabayaran.Kaya para sa akin, compound interest ay mabuting kaibigan kung investor ako, pero delikadong kaaway kapag ako ay may utang.
