An account was opened with an investment of OMR2,000 10 years ago. The ending balance in the account is OMR3,500. If the interest was compounded annually, what rate was earned on the account?
An account was opened with an investment of OMR2,000 10 years ago. The ending balance in the account is OMR3,500. If the interest was compounded annually, what rate was earned on the account?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:An account was opened with an investment of OMR2,000 10
years ago. The ending balance in the account is OMR3,500. If the
interest was compounded annually, what rate was earned on
the account?
Expert Solution
Step 1 Computation of Rate of Interest
Rate of Interest is the rate which is earned on the investment done by the investor. Higher the interest rate, higher will be the return on investment to the investor and vice-versa.
Here, in this question we need to calculate the rate of interest earned on the investment made ten years ago.
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