Question

Mr. Dalisay expects to have P^(1),000,000 in his fund at the end of 15 years. If he invested 300,000 at the start of the term, what is the interest rate applied?

Answer 1

To calculate the interest rate applied, we can use the formula for compound interest and solve for the interest rate using the given values.

Step-by-step explanation:

To calculate the interest rate applied, we can use the formula for compound interest:

Future Value = Present Value × (1 + Interest Rate)Number of Periods

In this case, we have the future value (P^(1),000,000), the present value (P300,000), and the number of periods (15 years). We need to solve for the interest rate:

Interest Rate = (Future Value / Present Value)1 / Number of Periods - 1

Plugging in the values:

Interest Rate = (P^(1),000,000 / P300,000)1 / 15 - 1

Simplifying this equation will give us the interest rate.