Question

5) Paul invests $3,092 in a savings account

with a fixed annual interest rate
compounded 4 times per year.
After 9
years,
the balance reaches $4,835.71.
What is the interest rate of the account?

Answer 1

R = 5% per year

Explanation:

Solving for rate r as a decimal

r = n[(A/P)^1/nt - 1]

r = 4 × [(4,835.71/3,092.00)^1/(4)(9) - 1]

r = 0.05

Then convert r to R as a percentage

R = r * 100

R = 0.05 * 100

R = 5%/year

Summary:

The interest rate required to get a total amount of $4,835.71 from compound interest on a principal of $3,092.00 compounded 4 times per year over 9 years is 5% per year.