Question

Evelyn is going to invest $3,500 and leave it in an account for 16 years. Assuming the interest is compounded quarterly, what interest rate, to the nearest tenth of a percent, would be required in order for Evelyn to end up with $6,200?

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Answer 1

3.6%

Explanation:

Answer 2

Quarterly interest rate= 0.8974%

Explanation:

Giving the following formula:

Initial investment (PV)= $3,500

Future Value (FV)= $6,200

Number of periods (n)= 16*4= 64 quarters

It is almost impossible to calculate the interest rate using a formula. To determine the interest rate, we need to use a financial calculator:

Function: CMPD

n= 64

I%= SOLVE= 0.8974

PV= 3,500

FV= -6,200

Quarterly interest rate= 0.8974%