Answer to Question #193111 in Financial Math for Barent

Question

Bonita invested R40 000 in order to have R56 000 available in 30 months' time. The yearly rate, compounded semi-annually, is

1.     7,21%.

2.     16,00%.

3.     8,00%.

4.     14,41%.

5.     13,92%.

Answer 1

Investment = 40000

Amount in 30 months = 56000

Months = 30

Hal yearly terms (n) = 30/6 =5

Interest rate for 6 months = r

Therefore,

$=> 40000\times(1+r)^n = 56000$

$=> (1+r) ^5 = \frac{56000}{40000}$

$=> 1+r = 1.40^{(\frac{1}{5})}$

$=> r = 1.0696 - 1$

$=> r = 0.0696$

$=> r = 6.96\%$

Therefore, Interest rate per annum $6.96\%\times2 =13.92\%$

The correct answer is option 5