Question

What would the annual rate of interest have to be? round to two decimal places.

Answer 1

To find:

The rate of interest.

Solution:

It is known that the rate of interest is given by:

`r=n[((A)/(P))^{(1)/(nt)}-1]`

Here. P = 60000, A = 61200, t = 2.5 and n = 12.

`\begin{gathered} r=12[((61200)/(60000))^{(1)/(12(2.5))}-1] \\ r=0.00792366 \end{gathered}`

Change into the percentage by multiplying by 100:

`\begin{gathered} r=0.00792366 \\ r=0.79\% \end{gathered}`

Thus, the answer is 0.79% per year.