SOLUTION: George invested $12550 for 5 years. After 5 years, he received a total amount of N$22500 from his investment. Calculate the annual rate at which interest was paid?
Question 1140163: George invested $12550 for 5 years. After 5 years, he received a total amount of N$22500 from his investment. Calculate the annual rate at which interest was paid? Found 2 solutions by Theo, ikleyn:Answer by Theo(13342) (Show Source): You can put this solution on YOUR website! f = p * (1 + r) ^ n
f is the future value
p is the present value
r is the interest rate per time period
n is the number of time periods
in this problem, formula becomes:
22500 = 12550 * (1 + r) ^ 5
divide both sides of the equation ty 12550 to get:
(22500 / 12550) = (1 + r) ^ 5
take the fifth root of both sides of the equation and subtract 1 from both sides of the equation to get:
(22500 / 12550) ^ (1/5) - 1 = r
solve for r to get r = .1238484694.
confirm by multiplying 12550 by (1 + .1238484694) ^ 5 to get 22500.
the answer is confirmed, so the solution is that the annual interest rate is .1238484694, or 12.38484694%.
Since the problem says nothing about if the account is of simple interest or compound, I will assume, by default,
that it is of simple interest.
Then the interest is equal to = 15.857%. ANSWER