#2) 2 year(s) ago, Theo invested 38,077 dollars. He has earned and will earn 10.11 percent per year in compound interest. If Fatima invests 53,213 dollars in 2 year(s) from today and earns simple interest, then how much simple interest per year must Fatima earn to have the same amount of money in 7 years from today as Theo will have in 7 years from today? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.
Amount of money theo will have from investment date till 7 years from today.
| Future value | FV= | PV * (1+r)^N | |
| Present value | PV= | 38,077 | |
| Rate of interest | r= | 10.11% | |
| Number of years | N= | 9 | |
| Future value | FV= | 38077 *(1+0.1011)^9 | |
| FV= | 90,594.87 | ||
Since fatima earns simple interest and the interest is earned over 3 years
Given future value= 90,594.87
Simple rate of interest = r
Investment = 53213
Total interest required to be earned= 90,594.87-53213= 37381.87
Interest per year= 37381.87/3= 12460.62
Rate of interest= 12460.62/53213 * 100= 23.4165%= 0.2342
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