Question

In a WW Credit Union, your account balance triples in 12 years, where the interest rate on your savings is compounded monthly.

The Credit Union was offering a nominal interest of (APR): ?

Answer 1

Solution:
	Nominal interest of (APR)	9.19%
Working Notes:
	C0 = current account balance = Y
	FV=Future worth of account balance after 12 years = triples = 3 Y
	r=(APR nominal interest rate)/no of times compounded in a year= APR/12
	n = no. Of periods =no of years x no of times compounded in a year = 12 x 12 = 144
	Using future value formula
	FV= C0 x (1+r)^n
	3Y = Y   x (1 + (APR/12))^144
	3 = (1+ (APR/12))^144
	3^(1/144) = ( 1 + (APR/12))
	1.007658429 = ( 1 + (APR/12))
	APR = (1.007658429-1) x 12
	APR = 0.091901148
	APR= 9.19%
lets Check it
	FV= C0 x (1+r)^n
	FV= Y x (1+ (9.19%/12))^144
	FV= Y x 3
	FV= 3Y Which is triple
Please feel free to ask if anything about above solution in comment section of the question.