A bank advertises that you can double the money by investing it with them for 8 years. What is the interest rate offered by them?
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Most banks calculate interests by compounding them either monthly/ quarterly/half-yearly or annually. When amount doubles, to calculate the number of years of deposit, we may use 70/interest rate(r) rule. 70/8 = 8.75% approximately.
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An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, the compounding frequency, and the length of time over which it is lent, deposited or borrowed.
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