The simple interest rate per year that will accumulate the same amount of money in 2 years as a compound interest rate of 20% per year is closest to:
(a) 20.5%
(b) 21%
(c) 22%
(d ) 23%
F in year 2 at 20% compound interest = P(1.20)(1.20) = 1.44P
For simple interest, F = P + Pni = P(1 + ni)
P(1 + 2i) = 1.44P
(1 + 2i) = 1.44P
i = 22%
(c) 22%
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