Question

What rate of interest compounded annually is required to triple an investment in 10 years?

Answer 1

Answer:

The interest rate should be 11.6%.

Step-by-step explanation:

Let us assume that at r% rate of interest compounded annually is required to triple an investment of $P in 10 years.

So, using the formula of compound interest, we can write

$3P = P(1 + \frac{r}{100})^{10}$

⇒ $3 = (1 + \frac{r}{100})^{10}$

⇒ $(1 + \frac{r}{100}) = 1.116$

⇒ $\frac{r}{100} = 0.116$

⇒ r = 11.6 %

Therefore, the interest rate should be 11.6%. (Answer)