Question

Peyton is going to invest $440 and leave it in an account for 5 years. Assuming the

interest is compounded annually, what interest rate, to the nearest tenth of a percent,
would be required in order for Peyton to end up with $520?

Answer 1

The required interest rate would be of 3.4% a year.

Explanation:

The amount of money earned in compound interest, after t years, is given by:

In which P(0) is the initial investment and r is the interest rate, as a decimal.

Peyton is going to invest $440 and leave it in an account for 5 years.

This means that

So

What interest rate, to the nearest tenth of a percent, would be required in order for Peyton to end up with $520?

This is r for which P(t) = 520. So

Then

The required interest rate would be of 3.4% a year.