Question 1037691: Find the rate at which a sum of money will become four times the original amount in 2 years, if the interest is compounded half yearly.
Answer by Alan3354(69443)   (Show Source):
You can put this solution on YOUR website! Find the rate at which a sum of money will become four times the original amount in 2 years, if the interest is compounded half yearly.
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FV = PV*(1 + r)^t
t = 4 periods, 4 1/2 years.
r = rate per period
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FV = 4*PV = PV*(1 + r)^4
(1 + r)^4 = 4
(1 + r) = sqrt(2)
r = sqrt(2) - 1 =~ 0.414 per period
= 0.828 per year
= 82.8%
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IOW, a Payday loan.
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