What rate converted quarterly was the interest if P600,000 accumulates to P1,200,000 10 years later?
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What rate converted quarterly was the interest if P600,000 accumulates to P1,200,000 10 years later?
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Answer:
To find the annual interest rate, if P600,000 accumulates to P1,200,000 in 10 years, you can use the formula for compound interest:
A = P(1 + r/n)^(nt)
where:
A = the final amount (1,200,000 in this case)
P = the initial principal (600,000 in this case)
r = the interest rate (unknown)
n = the number of times the interest is compounded per year (quarterly in this case)
t = the number of years the money is invested (10 in this case)
Solving for r, we get:
r = ( (A/P)^(1/nt) - 1) * n
Substitute the given values:
r = ( (1,200,000 / 600,000)^(1/ (4*10)) - 1 ) * 4
The annual interest rate that would convert to quarterly is about 8.8%.
Step-by-step explanation:
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