Question

P=

500(1.035)"
The value, P, in dollars, of $500 invested in an account earning interest at a constant rate,
compounded annually, after n years is given by the equation shown above, assuming no
additional investments or withdrawals are made. What is the annual interest rate on the account,
in percent? (Ignore the % symbol when entering your answer. For example, if the answer is
11.2%, enter 11.2.)
Answer:
%

Answer 1

The annual interest rate, r, is calculated using the equation:

P = 500(1 + r)^n

We can then rearrange the equation to calculate the value of r:

r = (P/500)^(1/n) - 1

Therefore, substituting the given value of P, we can calculate the annual interest rate as:

r = (500(1.035))^(1/n) - 1

r = (517.5)^(1/n) - 1

r = 0.035^(1/n) - 1

r = 0.035^(1/n) - 1

r = 11.2%