Nelson took out a home loan that compounds interest semiannually. The following expression represents the payable amount after t years.

150,000 (1.102) ^2t

What is the annual rate of interest for this situation?

A. 0.6%

B. 2.4%

C. 1.2%

D. 0.06%

Given that Nelson took out a home loan that compounds interest semiannually, and the following expression represents the payable amount after t years.

150,000 (1.102) ^2t

which follow the formal for compound interest given by:

A=P (1+r/n) ^tn

where:

A=future amount

P=principle

r=rate

n=number of terms

t=time

in our example:

1+r/n=1.012

this implies that:

r/n=0.012

number of terms=2 (it's semiannual)

thus

r / (2) = 0.012

hence

r=0.012*2

r=0.024

hene

thus the answer is:

r=0.024~2.4%