Question

Jayden is going to invest $540 and leave it in an account for 10 years. Assuming the

interest is compounded quarterly, what interest rate, to the nearest hundredth of a
percent, would be required in order for Jayden to end up with $700?

Answer 1

r = 2.60%

Explanation:

A= P(1+r/n)^nt

A=700 P=540 t=10 n=4

700= 540(1+r/4)^4(10)

700= 540(1+r/4)^40

700/540= 540(1+r/4)^40/540

1.2962963= (1+r/4)^40

(1.2962963)^1/40=[(1+r/4)^40]^1/40

1.0065089= 1+r/4

-1 -1

0.0065059= r/4

4(0.0065059) = (r/4)4

0.0260356 = r

2.60356% = r

r = 2.60%