Sherpa invests $10,000 in a saving account which pays a compound interest at R% per year if the total interest earned in 2years is $400, find the value of R.

Answer 1

Solve this for R (as a decimal):

10,000*(1 + R)^2 = 10,400
(1+R)^2 = 1.0400
1+R = 1.0198
R = 0.0198 or 1.98%