Question

Suppose you deposit $1,105.00 into an account 7.00 years from today. Exactly 14.00 years from today the account is worth $1,454.00. What was the account's interest rate? Submit Answer format: Percentage Round to: 3 decimal places (Example: 9.243%, % sign required. Will accept decimal format rounded to 5 decimal places fox. 0.09243)

Answer 1

Future Value = present value(1+interest rate)^number of years

Number of years = 7

1454 = 1105(1+Interest rate)^7

(1+Interest rate)^7 = 1.315837

Hence, interest rate = 3.999%

or 4% approx.