Question

a finance company advertises that it will pay a lumpsum of 44650 at the end of 5 years to investors who deposit annually rs 6000 for 5 years what is the rate of interest

Answer 1

Answer:

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Answer 2

Answer:

Interest rate is  $20 \% .$

Step-by-step explanation:

The interest rate may be calculated in two steps:

a. Find the FVIFA for this contract as follows:

$\text { Rs. } 6000 \text { (FVIFA) }=\text { Rs. } 44,650 \text { so, }$

FVIFA$=44650 / 6000=7.442$

b. Look at the FVIFA table and read the row corresponding to 5 years until $7.442$ or a value close to it is reached. Doing so we find that

$\mathrm{FVIFA}_{20 \%, 5 y}$ is $7.442$,

so we have concluded that the interest rate is$20 \% .$