Multiple choice

David invested £15000 for 2 years in a investment company and recieved £18816 at the end of two years. What is the rate of interest per annum if interest is compounded annually?

  1. 6%

  2. 8%

  3. 12%

  4. 15%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

For compound interest, 15000(1 + r)^2 = 18816. The multiplier is 18816/15000 = 1.2544 = 1.12^2, so r = 0.12, or 12% per annum.

AI explanation

Using the compound interest formula A = P(1 + R/100)^n, we substitute the values to get 18816 = 15000 * (1 + R/100)^2. This simplifies to (1 + R/100)^2 = 1.25504, meaning 1 + R/100 equals 1.12. Therefore, the rate of interest is 12%.

Keep practicing — related questions