20000 amounts to 24200 in two years under compound interest compounded annually whats rate of interest per annum

20000 amounts to 24200 in two years under compound interest compounded annually whats rate of interest per annum

 

FV = PV [1 + R]^N

24,200 = 20,000[1 + R]^2    divide both sides by 20,000,

1.21 = [1 + R]^2                        take the square root of both sides,

1 + R = Sqrt(1.21)

1 + R = 1.1                                   subtract 1 from both sides,

R =1.1 - 1                                     multiply by 100,

R =0.1 x 100

R = 10% - Interest rate compounded annually.