Question

at what rate a sum of money will becomes four times of itself in 2 years, if the interest compounded annually?

Answer 1

Answer:

For compound interest FV = PV(1+i)^n

From the first scenario 16 = 1(1+i)^4 solving for i yields an annual interest rate of 200%

Putting this into the equation for the second scenario yields: 27 = 1(1 + 200%)^n

Solving for n yields 3 periods = 3 years.

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