Question

Mr x will retire at the age of 60 years he wishes to have an amount of 200000 in his account at the time of retirement currently he is 40years and has an amount of 25000 how much interest rate bank should offer

Answer 1

Rate of interest = 10.95%

Explanation:

Given:

Amount deposit in bank = 25,000

Number of year = 60 year - 40 year = 20 year

Future value = 200,000

Find:

Rate of interest

Computation:

A = P[1+r]ⁿ

Future value = Amount deposit in bank[1+Rate of interest]ⁿ

200,000 = 25,000[1+r]²⁰

8 = [1+r]²⁰

1.1095 = 1 + Rate of interest

Rate of interest = 0.1095

Rate of interest = 10.95%