A sum of money becomes 16 times in 2 years. What is the annual compound interest rate?
Show answer & explanation
Correct answer: C
Explanation
Given:
Amount multiplied in 2 years = 16 times
By the formula:
A = P(1 + r/100)²
16P = P(1 + r/100)²
16 = (1 + r/100)²
√16 = 1 + r/100
4 = 1 + r/100
r/100 = 3
r = 300
Interest rate = 300%