Question

Jerry deposited $10,000 in a bank account, and 10 years later he closes out the account, which is worth $18,000. The annual rate of interest that Jerry has earned over the 10 years is closest to:

Answer 1

r= 6.054% per year

Step-by-step explanation:

given that

principal P= $10,000

final amount A= $18,000

time t= 10 years

To find the annual rate we will use the formula below and solve for r

`r = [((A)/(P) )^(1)/(t) - 1]`

Substituting our data into the expression and solving for r we have

`r = [((18000)/(10000) )^(1)/(10) - 1]\\\\r = [(1.8 )^(1)/(10) - 1]\\\\r = [(1.8 )^0^.^1 - 1]\\\\r = [(1.8 )^0^.^1 - 1]\\r={1.06054-1}\\\\r= 0.06054`

Calculate rate of interest in percent

r = 0.06054* 100

r= 6.054% per year