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Find the interest rate for a ​$9000 deposit accumulating to ​$10,450.66​, compounded quarterly for 5 years.

User Delby
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1 Answer

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Final answer:

To find the interest rate for a $9000 deposit accumulating to $10,450.66, compounded quarterly for 5 years, you can use the formula A = P(1 + r/n)^(nt). In this case, the interest rate is approximately 7.2%.

Step-by-step explanation:

To find the interest rate for a $9000 deposit accumulating to $10,450.66, compounded quarterly for 5 years, we can use the formula A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years. In this case, A = $10,450.66, P = $9000, n = 4 (quarterly compounding), and t = 5. Substituting these values into the formula, we get:

$10,450.66 = $9000(1 + r/4)^(4*5)

Dividing both sides of the equation by $9000, we have:

1.161185 ≈ (1 + r/4)^20

Taking the 20th root of both sides, we get:

1 + r/4 ≈ 1.018

Subtracting 1 from both sides, we have:

r/4 ≈ 0.018

Multiplying both sides by 4, we get:

r ≈ 0.072 or 7.2%

The interest rate for this deposit is approximately 7.2%.

User Arne Fischer
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