Answer:
2.6%
Step-by-step explanation:
Solution:
Let:
P = Principal (Amount invested initially)
R = Annual Interest Rate
T = Time (in years)
After 2 years, compounded amount is given by:
[tex]A_1 = P(1+R)^2\\\\\text{or, }658.2 = P(1+R)^2.........(1)[/tex]
After 5 years of investing in bank, compound amount is given by:
[tex]A_2=P(1+R)^5\\\\\text{or, }710.8=P(1+R)^5.........(2)[/tex]
Dividing equation(2) from equation(1),
[tex]\dfrac{A_2}{A_1}=\dfrac{P(1+R)^5}{P(1+R)^2}\\\\\\\text{or, }\dfrac{710.89}{658.2}=(1+R)^3\\\\\text{or, }1.08=(1+R)^3\\\\\text{or, }1+R=\sqrt[3]{1.08}=1.026\\\\\text{or, }R=0.026\\\\\text{or, }R=2.6\%[/tex]
