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Sonbull [250]
3 years ago
13

A downtown bank is advertising that if you deposit $1,000 with them, and leave it there for 65 months, you can get $2,000 back a

t the end of the period. Assuming monthly compounding, what is the interest rate paid by the bank
Business
1 answer:
Musya8 [376]3 years ago
8 0

Answer:

Rate of interest = 1.07% (Approx)

Explanation:

Given:

Future deposit value (FV) = $2,000

Present deposit value (PV) = $1,000

Total number of period (n) = 65 month

Rate of interest (r) = ?

Computation of Rate of interest :

Future\ deposit\ value = PV(1+r)^n

2,000=1,000(1+r)^{65}

\frac{2,000}{1,000} =(1+r)^{65}

2 =(1+r)^{65}

1+r = 1.01072086

r = 1.01072086-1\\\\r = 0.01072086

r = 1.072086%

Rate of interest = 1.07% (Approx)

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