Question

Shakari opens a savings account with a deposit Of $3,500. She deposits $500 six months later and $800 nine months after opening the account. The balance in Shakari's account one year after she opened it is $5,012. Assuming that the account grows by compound interest at a constant annual effective interest rate i, find i.

Answer 1

Answer:

5.367%

Step-by-step explanation:

Shakari total principal amount would be

$3500 + $500 + $800 = $4800

The interest amount she earns would be

$5012 - $4800 = $212

This interest is generated by the $3500 for a year, by $500 for half a year, and by $800 for a quarter of a year (3 months). At the annual interest rate of i, we have the following equation:

$3500i + 500 \frac{i}{2} + 800\frac{i}{4} = 212$

3500i + 250i + 200i = 212

3950i = 212

i = 212 / 3950 = 0.05367 or 5.367%