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?

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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) About Me  (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%.


Answer by ikleyn(52787) About Me  (Show Source):
You can put this solution on YOUR website!
.

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  %28%2822500-12550%29%2F%285%2A12550%29%29%2A100 = 15.857%.    ANSWER