Question

Consider the compound interest equation B(t)=100(1.1664)^t

Assume that n=2, and rewrite B(t) in the form B(t)=P(1+r/n)^nt

What is the interest rate, r, written as a percentage?

Enter your answer as a whole number, like this: 42

Answer 1

Solution:

$B(t)=P(1+\frac rn)^{nt}$

$B(t)=100(1.1664)^t=100(1+0.1664)^t$

Put $n=2$

$B(t)=100(1+\frac{0.1664}{2})^{2t}$

Here, interest rate, $r=0.1664=16.64\%\approx17\%$

Answer is 17.