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An investment fund has increased in value by a total of 21% over the last 2 years.

a)A man invested £1000 in the fund two years ago.What is it worth now?

b)Calculate the yearly rate of interest assuming that it was: i)Compound interest  ii)Simple Interest

working please

 May 19, 2014

Best Answer 

 #5
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+5

Great..Thank you :*

 May 19, 2014
 #1
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Urgently!Please!Its N emergency 

 May 19, 2014
 #2
avatar+130511 
+5

It is worth $1210 now    the interest earned is $210

Simple interest

I = Prt

210 = 1000(r)2

210 = 2000 (r)

r = .105 = 10.5% = simple interest rate

Compound Interest

1210 = 1000(1+ r)2    Divide both sides by 1000

1.21 = (1 + r)2           Take the log of both sides

log 1.21 = log (1 + r)2    By a property of logs, we have

log 1.21 = 2 log (1 + r)    divide by 2 on each side

(log 1.21) / 2 = log (1 + r)

.041392685158225 = log (1 + r)

So we have

10.041392685158225  = r + 1

1.099999999999999897 = r + 1   subtract 1 from both sides

r = .0999999 =  9.99999% = 10% = compound interest rate

 May 19, 2014
 #3
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Please solve it without using log function 

 May 19, 2014
 #4
avatar+130511 
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OK...so we have

1000(1 + r)(1 +r) = 1210      divide by 1000

(1 + r)2    = 1.21      take the square root of both sides

1 + r = 1.1               subtract 1 from both sides

r = .1  = .10 = 10%

How's that??

 May 19, 2014
 #5
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+5
Best Answer

Great..Thank you :*

Guest May 19, 2014
 #6
avatar+118723 
0

Thank you anonymous for you good manners. 

 May 20, 2014

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