find the equivalent rate of compound interest if there is a 8% p.a simple interest on a principal that is $10,000 for 5 years. Is there a formula to find the equivalent rate of compounding interest?

Question

anonymous · Answer

for finding the equivalent rate of compounding interest
the amount in the two cases are to be equal..

anonymous · Answer

If the rate is 8% simple interest then what will be the rate in compound interest?

anonymous · Answer

@matricked

anonymous · Answer

assume the rate to be r%per annum and then proceed

anonymous · Answer

That's what I did

anonymous · Answer

??

anonymous · Answer

I used the compounding forma to find r

anonymous · Answer

I inserted $4000 which is simple interest into the equation

anonymous · Answer

10000*(1+r/100)^5 = 10000*(1+5*8/100)
now find r

anonymous · Answer

you may use logarithm...

anonymous · Answer

Ill solve it on paper and get back to you

anonymous · Answer

Where did you get 5 x 8

anonymous · Answer

from the simple interest formula

for 5yrs  @8%

anonymous · Answer

Yes but what formula did you use

anonymous · Answer

Why isn't the 5 represented as n

anonymous · Answer

I got 7%

anonymous · Answer

P(1+R)^n = P + P * r * t

anonymous · Answer

Is this correct?

yttrium · Answer

Just take note that
F = P (1+i)^n
Where P = principal value, F = future value, i = interest rate.

anonymous · Answer

P(1+R)^n = P + P * r * t is correct...

anonymous · Answer

Thanks @matricked