A sum of money invested at compound interest becomes $1600 in 2 years and $1764 in 3 years. What is the rate of interest?
Practice Questions
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Q1
A sum of money invested at compound interest becomes $1600 in 2 years and $1764 in 3 years. What is the rate of interest?
10%
12%
15%
20%
The amount increases from $1600 to $1764 in one year, which is an increase of $164. The rate can be calculated as (164/1600) * 100 = 10.25%, which rounds to approximately 12%.
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Q: A sum of money invested at compound interest becomes $1600 in 2 years and $1764 in 3 years. What is the rate of interest?
Solution: The amount increases from $1600 to $1764 in one year, which is an increase of $164. The rate can be calculated as (164/1600) * 100 = 10.25%, which rounds to approximately 12%.
