Question

Suppose $600 is compounded yearly for 20 years. If no other deposits are made, what rate is needed for the balance to triple in that time? Round your answer to the nearest hundredth of a percent.

Answer 1

5.65%

Explanation:

Principal=$600

Time=20 years

FV=600*3=$1800

n=1

r=?

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

=1{(1800/600)^ 1/1*20 - 1}

={(3)^1/20-1}

=3^0.05-1

=1.0565-1

=0.0565

rate=0.0565*100

=5.65% to the nearest hundredth percent