Question

Jeh and Carlos put 200,000 kes (kenyan shilling) and 300,000 kes into savings accounts at different banks. After 6 years, Jeh and Carlos have the same amount of money in their accounts. They both receive interest compounded quarterly and Jeh has an annual interest rate three times greater than Carlos. Work out the annual interest rate that Jeh receives. Give your answer correct to 1 decimal place.

Answer 1

To find the annual interest rate that Jeh receives, set up an equation using the compound interest formula and solve for x.

Step-by-step explanation:

To solve this problem, we can set up an equation to find the annual interest rate that Jeh receives. Let's assume that Jeh's annual interest rate is x.

The formula for compound interest is given by: A = P(1 + r/n)^(nt), where A is the final amount, P is the initial principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.

For Jeh, the final amount after 6 years can be written as: 200,000(1 + x/4)^(4*6).

For Carlos, the final amount after 6 years is: 300,000(1 + x/12)^(12*6).

Since both Jeh and Carlos have the same amount of money in their accounts after 6 years, we can set up the equation: 200,000(1 + x/4)^(4*6) = 300,000(1 + x/12)^(12*6).

Now, we can solve this equation to find the value of x, which will give us the annual interest rate that Jeh receives.