Question

At the end of year 4, the account was valued at $2433.91. At the end of year 5, the account was valued at $2494.76. What was the interest rate, as a percent? Round your answer to the nearest tenth.

A) 2.5%
B) 3.0%
C) 3.5%
D) 4.0%

Answer 1

To find the interest rate, calculate the percent increase from the account value at the end of year 4 to the end of year 5. The interest rate is 2.5%.

Step-by-step explanation:

To calculate the interest rate, you need to find the percent increase from the account value at the end of year 4 to the account value at the end of year 5.

Step 1: Calculate the percent increase by taking the difference between the two values and dividing it by the value at the end of year 4.

Step 2: Multiply the percent increase by 100 to convert it to a percentage.

Using the given values, the percent increase is (2494.76 - 2433.91) / 2433.91 = 0.025. Multiplying by 100 gives an interest rate of 2.5%. Therefore, the answer is A) 2.5%.