Question

At what rate per cent will a sum of 64,000 be compounded to 68,921 in three
years?​

Answer 1

The compound interest formula is as follows:

A = P (1 + r/n)ᵃᵇ

Where:

A = The total sum accrued, sum + interest

P = the principal investment amount

 

r = the annual interest rate (decimal)

a = the number of times that interest is compounded per year

b= the number of years the money is invested or borrowed for

Therefore we can use the above information to calculate our rate:

A = 68921

P = 64000

r = ?

a= 1

b= 3

68921 = 64000 ( 1 + r/1) ¹ˣ³

68921 = 64000 ( 1 + r)³

(1+r)³ = 68921/64000 = 1.076890625

(1+r)³ = 1.076890625...........find cube root of both

1+r = 1.025

r = 1.025 - 1

r = 0.025

r = 0.025 x 100% = 2.5%

Therefore the percent rate = 2.5%