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  1. #1
    rcs
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    investment

    if an investment of $ 25,000 accumulates to P27,500 in 18 months, find the single interest rate?


    this is my attempt: 27,000 - 25,000 = 2000 / 18 then the quotient is divided by 25,000. is this possible?
    Last edited by rcs; September 15th 2012 at 05:56 AM.
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  2. #2
    Senior Member DeMath's Avatar
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    Re: investment

    I think it is

    \frac{27500-25000}{25000}=\frac{1}{10}=0.1\quad (\text{or}~10\%)
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  3. #3
    rcs
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    Re: investment

    [QUOTE=DeMath;736289]I think it is

    \frac{27500-25000}{25000}=\frac{1}{10}=0.1\quad (\text{or}~10\%)[/QUOTE

    thanks but... the key answer from the book said that it is 6 2/3 % hmmmmmmmm... im confused... im still solving it here huuhuhuuhuh
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  4. #4
    Senior Member DeMath's Avatar
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    Re: investment

    [QUOTE=rcs;736298]
    Quote Originally Posted by DeMath View Post
    I think it is

    \frac{27500-25000}{25000}=\frac{1}{10}=0.1\quad (\text{or}~10\%)[/QUOTE

    thanks but... the key answer from the book said that it is 6 2/3 % hmmmmmmmm... im confused... im still solving it here huuhuhuuhuh
    Need to find the annual single interest rate

    \frac{1}{10}\cdot \frac{12}{18}=\frac{1}{10}\cdot \frac{2}{3}= \frac{1}{15}, i.e. \left(\frac{1}{15}\cdot 100\right)\!\%= \frac{20}{3}\%= 6\tfrac{2}{3}\% (annual rate).
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  5. #5
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    Re: investment

    Very unclear question.

    25000(1 + i)^1.5 = 27500
    (1 + i)^1.5 = 27500/25000
    1 + i = (27500/25000)^(1/1.5) : remember that if a^p = b, then a = b^(1/p)
    i = (27500/25000)^(1/1.5) - 1
    i = .0656... : so annual rate = ~6.56%

    Your 6 2/3% result assumes SIMPLE interest; if so, then SHOULD be specified in the problem statement.
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