Question

What simple interest rate is equivalent to a compound interest rate of 6% p.a. over 10 years correct to two decimal places?

Answer 1

Let's compare the value of $1 at the end of 10 years at both types of interest:

compound: Value = 1(1.06)^10

simple: let the rate be r
interest = 1(10)(r) = 10r
value = 1 + 10r

so 1 + 10r = 1.06^10
10r = 1.790847... - 1
r = .0790847...
rate = 7.91% to 2 decimals

Answer 2

wtf am i looking at not helpful man im 13

Answer 3

wtf