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

Guest May 14, 2017
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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. 

Guest May 14, 2017

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