Question 71
A certain amount invested at a certain rate, compounded annually, grows to an amount in two years, which is a factor of 1.1881 more than to what it would have grown in three years. What is the rate percentage?
Solution
Think of the logic here.
It means after three years if we have the same amount to be invested for a period of two years it would give the same 1.1881 times.
it means,
$$P\left(1 +\frac{x}{100}\right)^2$$ = $$1.1881P$$
which becomes
$$\left(1 +\frac{x}{100}\right)$$ = $$(1 +\frac{9}{100})$$
i.e. x= 9
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