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Popular Word Problems >

A sum of 1000 was invested for 4 years, and the interest was compounded semiannually. If this sum amounted to 1440.16 in the given time, what was the interest rate?

Solution

A s u m o f 1000 w a s in v es t e d f or 4 ye a rs, an d t h e in t eres t w a s co m p o u n d e d se miann u a ll y . I f t hi s s u m am o u n t e d t o 1440.16 in t h e g i v e n t im e, w ha t w a s t h e in t eres t r a t e ?

Solution

Rate : 9.32993 \dots %

Solution steps

Translate the problem into an equation:

1440.16 = 1000 (1 + \frac{r}{2})^{2 \cdot 4}

Solve for

r, 1440.16 = 1000 (1 + \frac{r}{2})^{2 \cdot 4} : r = 9.32993 \dots %

Rate : 9.32993 \dots %

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