Question

In 1 year a sum of money at compound interest amounted to $424 and in 2 years amounted to 449.44 (payable yearly) Determine the rate percent

Answer 1

6%

Explanation:

The compound interest growth factor is ...

(second year value)/(first year value) =

$449.44/$424 = 1.06 = 1 + growth rate

Then the growth rate is 1.06 -1 = 0.06 = 6%.

The compound interest rate is 6%.

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The initial sum invested is $400.