Question

Suppose you deposit $1,038.00 into an account 5.00 years from today. Exactly 17.00 years from today the account is worth $1,565.00. What was the account's interest rate?

Answer 1

The account's interest rate is computed as shown below:

Future Value = Present Value ( 1 + r )ⁿ

$ 1,565 = $ 1,038 ( 1 + r )^{17 - 5}

$ 1,565 = $ 1,038 ( 1 + r )¹²

Solving for r, will give

r = 3.48% Approximately

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