Question

11. What is the limit that a %1 investment could grow to if you earn 100% compound interest in 1 year?

Answer 1

Solution :- Let the principal value be denoted by P.

Amount = Principal * (1 + Rate of interest)^{Time period in years.}

= 0.01 P * (1 + 100 / 100)¹

= 0.01 P * (1 + 1)¹

= 0.01 P * (2)¹

= 0.01 P * 2

= 0.02 P i.e., Principal investment will grow to 2 % (0.02 * 100).

Conclusion :- 1 % investment will grow to 2 % limit in the above given question.