At what rate will the sum of 1200 amount to 2348.32 in 2yrs? if compounded quarterly

1 Answer
May 11, 2018

color(blue)(35.018%)

Explanation:

The formula for compound interest is given by:

FV=PV(1+r/n)^(nt)

Where:

FV= "future value".

PV="present value"

r="interest rate given as a decimal"

n="compounding period"

t="time in years".

From given information, we have:

t=2

n="quarterly"=4

PV=1200

FV=2348.32

We are looking to find interest rate r:

1200(1+r/4)^8=2348.32

(1+r/4)^8=2348.32/1200

(4+r)^8/4^8=2348.32/1200

(4+r)^8=4^8(2348.32/1200)

(4+r)^8=128249.5829

r=root(8)(128249.5829)-4=0.350177674

This is in decimal form, so:

r=35.018%