Question

What interest rate per annum is a fund paying its clients if the third to the last payment of a depositor became Php 1,040.40 from an initial savings payment of Php 1,000.00?

Answer 1

Answer: The rate of interest per annum is 1.3%.

Explanation:

Given Principal P= $1000

time period n=3

Amount A=$1040,40

To find rate of interest per annum r

We know that

`A=P(1+(r)/(100) )^3\\\Rightarrow\ 1040=1000(1+(r)/(100))^3\\\Rightarrow\ 1.040=(1+(r)/(100))^3\\\text{taking log on both sides}\\log(1.040)=3log(1+(r)/(100))\\\Rightarrow0.039=3log(1+(r)/(100))\\\Rightarrow0.013=log(1+(r)/(100))\\\\\Rightarrow\ e^(0.013)=(1+(r)/(100))\\\Rightarrow\ 1.013=(1+(r)/(100))\\\Rightarrow\ (r)/(100)=1.013-1=0.013\\`

⇒ r = 1.3%.