Question

You have $2000 to invest in an account and need to have $2500 in five years. What annual interest rate would you need to have in order to have this if the amount is compounded monthly?

a) 4%
b) 2%
c) 5%
d) 3%

Answer 1

c) 5%

Explanation:

A = $ 2,566.72

A = P + I where

P (principal) = $ 2,000.00

I (interest) = $ 566.72