Question

Alex puts $2000 in a saving account.After 4 years, she had $2543 in the account. What rate of interest did she earn? Use the formula A=Pe^rt, where A is the ending amount, P is the principal (initial amount), r is the interest rate, and t is time.

A. 24%
B. 12%
C. 6%
D. 8%

Answer 1

Total = Principal * e ^ (rt)

We must solve this for rate:

rate = (ln (end amt / bgn amt)) / time

rate = (ln (2,543 / 2,000)) / time

rate = (ln (1.2715)) / 4

rate = 0.24019730588 / 4

rate = 0.0600493265

This would round to 6 per cent.

Answer is C

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