Paddy and Anna each invest $2000 for 5 years. Paddy earns simple interest at a rate of 1.25% per year.

Anna earns compound interest at a rate of r% per year.

At the end of 5 years, Paddy's investment is worth the same as Anna's investment.

Calculate the value of r.

r= 1.22

Step-by-step explanation:

Formula for amount with simple interest =

, where

P= principal value , r= rate of interest , t = time.

Given: P=  $2000, t= 5 years, r= 1.25% = 0.0125

Formula to compute compound amount :

When both have same worth then

taking log on both sides , we get

Hence, Value of r= 1.22

54

step-by-step explanation: