Question

Jon has $5,000 to invest in a savings account that has interest compounded annually. If he wants his money to double in eight years, what percent must the interest rate be on the account?

Answer 1

Your answer will be ........9

Answer 2

Rate=9.05%

Explanation:

Let P represent the Principal ,t the time = 8 years and r be the rate of interest.

It is given money doubles in 8 years so A=2P.

The compound interest is given by the formula :

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

Substituting the values we have:

`2P=P( 1+r^){8}`

Dividing both sides by P :

`2=(1+r)^(8)`

`2^{(1)/(8) } =1+r`

1.0905-1=r

r=0.09050

r=9.05%