We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
31603=9860*(1+r/100)^20
(31603/9860)^(1/20)=(1+r/100)
(1+r/100)=1.06
r=1.06-1
=6%(Approx).
Atlernatively:
We input:
Future value=31603
N(time period)=20
Principal=9860
PMT(Annuity payment)=0
Hence interest rate=6%(Approx).
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