Question

What is the effective rate of interest if $1,000 compounds to $1,331 in 3 years? The effective rate of interest, if $1,000 compounds to $1,331 in 3 years is b

Answer 1

The answer is "10".

Step-by-step explanation:

Given:

T= 3 year

P= $ 1000

A= $ 1331

R=?

Formula:

`\bold{A= P(1+r)^t}`

`\Rightarrow 1331= 1000(1+(r)/(100))^3\\\\\Rightarrow (1+(r)/(100))^3=(1331)/(1000)\\\\\Rightarrow (1+(r)/(100))^3=((11)/(10))^3\\\\\Rightarrow (1+(r)/(100))=((11)/(10))\\\\\Rightarrow (r)/(100)=(11)/(10)-1\\\\\Rightarrow (r)/(100)=(11-10)/(10)\\\\\Rightarrow (r)/(100)=(1)/(10)\\\\\Rightarrow r=(1)/(10)* 100\\\\\Rightarrow r=10\\\\`