Question

At what rate percent per annum will 18,000 amount to 20,480 in 2 years compounded annually?

Answer 1

Answer:

The rate of interest is 6.67 per cent per year

Step-by-step explanation:

P = initial amount = 18000

R = rate of interest per cent per year = ?

T = time period (in years) = 2

A = final amount = 20480

We know that:

A = P*(1+R/100)^T

Hence

R = ((A/P)^(1/T) - 1)*100

Substituting for A, P and T, we get:

R = 100* ((20480/18000)^(1/2) - 1)

   = 100*((1.13778)^(1/2) - 1)

    = 100*(1.06667 - 1)

     = 6.67 (rounded off)

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