The interest rate is 6.992%, if a bank advertises that it compounds money quarterly and that it will take Double your money in 10 years.
Step-by-step explanation:
The given is,
Compounds money quarterly
Double your money in 10 years
Step:1
Formula to calculate future investment with compounded quarterly,
...............................(1)
Where, A - Future amount
P - Initial investment\
r - Rate of interest
n - No. of compounding in a year
t - No. of years
Step:2
Let, P = X
A = 2X ( Double your money )
From given, n - 4 ( for compounding quarterly )
t - 10 years
From equation (1)
Take root root on both side,
r = 6.992 %
Result:
The interest rate is 6.992%, if a bank advertises that it compounds money quarterly and that it will take Double your money in 10 years.
