Question

work if possible on the exam sheet. Pe the original exam or complete photocopy JUL L a nt dides unless specified therwise. P re label all your answer. You may use the page for scratch work You will only receive You may use Math Maple Excelles otherwise specified 7 Q103 Determining interest rate Suppose Susan Nassy invested $5,000 in a savings account that paid semiannual 2 times a year) com- pounded interest. After 8 years the money had accumulated to $6,704.19. What was the annual (apy) interest rate in percent? 10 points

Answer 1

Formula to calculate compounding interest rate -

r = n [ (A/P) ^1/nt - 1]

r = Interest Rate

n = number of times interest compounded

A = Value of investment

P = Principal

t = Time

r = 2[ (6,704.19/5,000)^1/2(8)-1]

r = 3.7 % per year