Question

The expression 1.021)^3t represents the interest that a credit union pays on a savings account.

What is the yearly interest rate?

Answer 1

Yearly interest rate would be 6.3%

Explanation:

Since, the amount formula of an investment after t years is,

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

Where,

Expression
`(1+(r)/(n))^(nt)` represents change factor in the investment,

In which, r = annul rate or yearly interest rate,

n = number of compounding periods,

t = number of years,

If change factor is
`(1.021)^(3t)` or
`(1+0.021)^(3t)`

Then,

By comparing,

`(r)/(n)=0.021, n = 3`

`\implies r = 3* 0.021= 0.063 = 6.3\%`

Hence, yearly interest rate would be 6.3%