Question

Ned currently has an account balance of $3634.51 he open the account 13 years ago with the deposit of $2564.65 if the interest compound twice a year what is the interest rate on the account

Answer 1

1.47%

Explanation:

Using the formula

F = P(1 + r/n)^(nt)

Where F = future value,

P = present value (or principal),

r = interest rate written as a decimal,

n = number of times interest is compounded per year,

t = time in years

Therefore;

3634.51 = 2564.65*(1 + r/2)^(2*13)

3634.51/2564.65= (1 + t/2)^(26)

1.4172 =(1 + t/2)^(26)

Then we get the 26th root on both sides, and solve for r

we get

r = 1.47%

Answer 2

r = 1.4%

Explanation:

We are given that Ned has an account balance of $3634.51 and he opened the account 113 years ago with the deposit of $2564.65.

If the interest compound twice a year, we are to find the interest rate on the account.

We will use the following formula:

`F=P(1+(r)/(n) )^(nt)`

Substituting the given values in the above formula:

`3634.51 = 2564.65*(1+(r)/(2) )^((2*3))`

`(3634.51)/(2564.65) =(1+(t)/(2))^(26)`

`1.4172=(1+(t)/(2) )^(26)`

Taking 26th root on both sides to get:

r = 1.4%