# Ratna invests £1200 for 2 years in a bank account paying r% per year compound interest. At the end of 2 years, the am

Ratna invests £1200 for 2 years in a bank account paying r% per year compound interest.

At the end of 2 years, the amount in the bank account is £1379. 2.

Calculate r

### 1 thought on “Ratna invests £1200 for 2 years in a bank account paying r% per year compound interest. At the end of 2 years, the am”

1. thuhuong
In order to acquire a total of £1379. 2 from compound interest on a principal of £1,200 compounded once per year for two years, an interest rate of 7.207% per year is needed.
Formula for compound interest is –
A = P(1+r/n)^nt
Where, A = Amount at the end of investment
P = Principal Amount or amount invested
r = rate of interest
n = number of times interest applications per period.
t = number of time periods elapsed
Here in the question A is £1379. 2
P = £1,200
t = 2 years
n = 1 (annually)
Solving for rate r as a decimal
r = n[(A/P)1/nt – 1]
r = 1 × [(1,379.20/1,200.00)1/(1)(2) – 1]
r = 0.0720696
Then convert r to R as a percentage
R = r * 100
R = 0.0720696 * 100
R = 7.207% per year