Question

Shawna invests $4,046 in a retirement account with a fixed annual interest rate compounded 6 times per year. After 19 years, the balance reaches $12,579.47. What is the interest rate of the account?

Answer 1

To find the interest rate of the account, use the formula for compound interest.

Step-by-step explanation:

To find the interest rate of the account, we can use the formula for compound interest:

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

Where P is the principal amount, A is the balance after t years, r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years.

Plugging in the given values, we have:

$4046 = $12579.47 / (1 + r/6)^(6*19)

Rearranging the equation and solving for r, we get:

r = (12579.47 / 4046)^(1/(6*19)) - 1

Calculating this, we find that the interest rate is approximately 6.5%.