Question

Alang is going to invest $5,300 and leave it in an account for 11 years. Assuming the interest is compounded annually, what interest rate, to the nearest hundredth of a percent, would be required in order for Alang to end up with $8,600?​

Answer 1

To find the interest rate required, we can use the compound interest formula: P = A / (1 + r/n)^(n*t). Substituting the given values into the formula, we find the interest rate to the nearest hundredth of a percent.

Step-by-step explanation:

To find the interest rate required, we can use the compound interest formula:

P = A / (1 + r/n)^(n*t)

Where:

• P = Principal amount ($5,300)
• A = Future amount ($8,600)
• r = Annual interest rate (unknown)
• n = Number of times interest is compounded per year (1)
• t = Number of years (11)

Substituting the given values into the formula, we get:

5,300 = 8,600 / (1 + r/1)^(1*11)

Simplifying the equation and isolating the interest rate r, we find:

r = (8,600 / 5,300)^(1/11) - 1