Question

Easton is going to invest $340 and leave it in an account for 8 years. Assuming the interest is compounded quarterly, what interest rate, to the nearest tenth of a percent, would be required in order for Easton to end up with $420?

Answer 1

100.7%

Explanation:

Since the interest is compounded quarterly, and there are 4 quarters per year, that would leave us with 32 quarters total where interest is acquired. Now, we need to find the interest rate, that would be required in order to end up with 420 dollars after 32 quarters.

We can setup a formula using our period of time and the money he invested into the bank:

`340(x)^(32)=420`

We can divide 340 from both sides, and simplify the right side to 21 divided by 17:

`x^(32)=(21)/(17)`

Taking the 32th root of 21/17 is equal to 1.00662, which is equal to 100.0662%. To the nearest tenth of a percent, this is equal to 100.7%.