Question

After 10 years, a 2000-dollar investment compounded annually has grown to 3600. What is the interest rate to the nearest whole-number percent?

Answer 1

6%

Explanation:

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Answer 2

In this question we need to use the compound interest formula, which is

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

A represents the amount after n years and P is the principal.

And in this question, P = 2000, n =10 years, r is unknown and A = 3600.

Substituting these values in the formula

`3600 = 2000(1+r)^(10)`

`(9)/(5) = (1+r)^(10)`

`1+r = ( (9)/(5))^(1/10)`

1+r = 1.06054

r=0.06054 or approx 6%