Question

A Principal of #5,600 was deposited for 3 years at compound interest If the interest earned was #1,250, find correct to 3 Significant figures, the interest rate Per annum​

Answer 1

To find the interest rate per annum with compound interest, use the formula: Interest = Principal × (1 + rate)^time - Principal. Plugging in the given values, the interest rate is approximately 7.14% per annum (rounded to 3 significant figures).

Step-by-step explanation:

To find the interest rate per annum, we can use the formula for compound interest:

Interest = Principal × (1 + rate)^time - Principal

Plugging in the given values:

• Principal = #5,600
• Interest = #1,250
• Time = 3 years
• Let the interest rate be 'r'

So, the equation becomes:

#1,250 = #5,600 × (1 + r)^3 - #5,600