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Sagot :
By using compound interest, it is found that the annual rate of increase was of 0.132%.
Given,
Valuation of 12 million php on 1st January 2007
8 million php on 1st January 2012.
Annual rate of change - ?
The amount of money earned, in compound interest after t years, is given as follows:
[tex]A(t) = P (1 +\frac{r}{n}) ^{nt}[/tex]
For this problem, the parameters are:
t = 5, A(t) = 6, A(0) = 12, n = 12.
Here,
P is the principal which is the initial sum of money.
A(t) is considered the amount of money after t years.
n is the number of times where interest is compounded.
r is the interest rate.
Thus, we solve for r to find the interest rate as follows:
[tex]A(t) = P (1 + \frac{r}{n}) ^{nt}[/tex]
[tex]8 = 12 (1 + \frac{r}{12}) ^{12X5}[/tex]
[tex](1 + \frac{r}{12})^{60} = 0.66[/tex]
[tex]\sqrt[60]{1 + \frac{r}{12}} ^{60}[/tex] = [tex]\sqrt[60]{0.66}[/tex]
[tex]1 + \frac{r}{12} = (0.66)^{\frac{1}{60}}[/tex]
1 + r/12 = 1.011
r/12 = 0.011
r = 12 x 0.011
r = 0.132
Hence, the annual rate of increase is of 0.132%.
To learn more about compound interest here:
https://brainly.com/question/14295570
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