If you receive $100 000 back as principal and interest at the end of the year for an initial investment of $93,869 at the start of the year, the interest rate that has been earned on your investment is ________% (two decimal places)

Finance Jun 23, 2021

Expert Solution

Computation of Interest Rate:

Future value = Present Value * (1+Rate)^Number of Periods

100000= 93869*(1+Rate)^1

100000/93869 = 1+Rate

1.065314 = 1+Rate

Rate = 1.065314-1

Rate = 0.065314 or 6.53%

So, Interest Rate is 6.53% per annum.

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