Question

Suppose that the amount in an account 3 years after a principal of 5000 was invested,is 6050 what was the interest rate

Answer 1

simple interest = 7%

compound interest = 6.56% (2 dp)

Explanation:

Depends if its compound or simple interest

Simple interest

6050 - 5000 = 1050

1050 ÷ 3 = 350

350/5000 = 0.07 = 7%

Compound interest

5000 x (1 + r)^3 = 6050

(1 + r)^3 = 1.21

1 + r = 1.065602237...

r = 0.06560223677... = 6.56%