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To save for​ retirement, Karla Harby put ​$475 each month into an ordinary annuity for 19 years. Interest was compounded monthly. At the end of the 19 ​years, the annuity was worth ​$234 comma 341. What annual interest rate did she​ receive?

User Stonyau
by
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1 Answer

5 votes

Answer:

Annual interest will be 33.036 %

Step-by-step explanation:

We have given initial amount P = $475

Time t = 19 years

As interest is compounded monthly

So number of period = 19×12 = 228 period

Final amount is given A = $234341

Amount is given by


A=P(1+(r)/(100))^n


234341=475(1+(r)/(100))^(228)


493.3494=(1+0.01r)^(228)


(1+0.01r)=(493.3494)^{(1)/(228)}


(1+0.01r)=1.027


0.01r=0.027


r=2.753 %

Annual interest = 12×2.753 =33.036 %

User Lathspell
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