Question

In how much time a principal of 1200 Rs would be twice by 4% compound Interest rate ?​

Answer 1

Answer:

Step-by-step explanation:

So, the formula for the calculation of compound interest is F=P⋅(1+r)n where:

F is the final value (principal + interest)

P is the principal

r is the interest rate

n is the period the interest rate will be compounded by

Replacing F with 2P gives us: 2P=P⋅(1+r)n

From there we just need to work the formula.

Dividing both sides by P: 2=(1+r)n

Applying nth root on both sides: 21n=1+r

Isolating r: r=21n−1

From here, just replace t with the desired period of time to get the interest rate for that period.

So, using t=3 (3 years), r=0.2599, which is 25.99% of interest rate per year.

If you use t=36 (36 months = 3 years), r=0.0194, which is 1.94% of interest rate per month.