Given:
A is 3,981.04 which is the accrued amount.
P is 3,760.19 which is the principal amount.
n is 365 because it is compounded daily.
t is 5 years which is the time.
To compute for the interest rate, compounded daily, the formula is:
r = n[(A/P)^1/nt - 1]
= 365[(3981.04/3760.19)^1/365(5) – 1]
= 365[(1.058733734199601615875735104343)^1/1825 – 1]
=365(0.00003127)
=0.01141355
~ multiply it to 100% to get the percentage= 1.141% is the interest rate
To check:
A = P (1 + r/n) ^ nt
= 3,760.19 (1 + 0.1141/365) ^ 365(5)
= $ 3,981
