Question

At what annual interest rate would $500 grow $1,948.00 in 12 years ? write your answer to the nearest whole number.

Answer 1

Okay, here we have this:

Considering the provided information, we are going to replace in the Compound Interest Formula, so we obtain the following:

$\begin{gathered} r=n((\frac{A}{P})^{\frac{1}{nt}}-1) \\ r=1((\frac{1948}{500})^{\frac{1}{1\cdot12}}-1) \\ r=1((\frac{1948}{500})^{\frac{1}{12}}-1) \\ r=\frac{1948^{\frac{1}{12}}}{500^{\frac{1}{12}}}^{}-1 \\ r\approx12\text{ percent} \end{gathered}$

Finally we obtain that the annual interest rate is approximately 12%.