176k views
4 votes
Lamonte is going to invest $3,900 and leave it in an account for 10 years. Assuming the interest is compounded monthly, what interest rate, to the nearest tenth of a percent, would be required in order for Lamonte to end up with $5,700?

User Waqasahmed
by
7.9k points

2 Answers

3 votes

This is a question of compound interest. Compound interest is interest on a principal amount, as well as any accumulated interest from previous periods. To solve for the interest rate, we can use the formula:

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

Where:

A = final amount

P = principal amount

r = interest rate (as a decimal)

n = number of times the interest is compounded per year

t = number of years the money is invested

We can set up the equation to solve for r:

5700 = 3900(1 + r/12)^(12*10)

and then use a calculator or a spreadsheet software to solve it.

The interest rate, to the nearest tenth of a percent, is 9.9%.

User Deerchao
by
8.1k points
6 votes

Answer:

Step-by-step explanation: 3.8

User Odgiiv
by
8.1k points