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How to find rate of interest when amount and principal are given and compounded annually

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4 votes

Explanation:

Use the compounding formula

amount = principal ( 1 + i)^n where i is decimal interest n = years

amount/principal = (1 + i)^n take LOZG of both sides

LOG ( amount/principal ) = n LOG ( 1 + i)

[ LOG (amount/principal) ] / n = LOG ( 1 +i) now raise each side to the 10

10^( ( LOG (amount/principal) /n) = 1 + i now subtract 1 from both sides to find i ...the decimal interest

User Gavin Terrill
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