Question

If the sum of money when compounded annually become 1140 in 2 years and 1710 in 3 years at rate of interest a) 30% b) 40% c) 50% d) 60%

Answer 1

in 2 years it is equal to 1140

in 3 years it is equal to 1710

between year 2 and year 3, it grew from 1140 to 1710.

this means that the third year amount is 1.5 * the second year amount, because 1710 / 1140 = 1.5

the actual growth rate would be (1710 - 1140) / 1140 = .5

a growth rate of .5 is equal to 50%.

your solution should be 50%.

a growth rate of 50% means that the value at each succeeding year is 1.5 times the value of the preceding year.

to find out what the starting value must have been, divide 1140 by (1.5)^2 to get 506 and 2/3.

multiply 506 and 2/3 by 1.5^3 and you get 1710.