Question

If you want to invest $8,500 in a program that compounds monthly so that I will have $12,000 in 5 years. What rate of interest must she find so that my investment will be successful?
a. 9.4%
b. 6.9%
c. 8.6%
d. 4.8%

Answer 1

P = principal amount (the initial amount you borrow or deposit)
r = annual rate of interest (as a decimal)
t = number of years the amount is deposited for
A = amount of money accumulated after n years, including interest
n = number of times the interest is compounded per year
\[A=P (1+\frac{r}{n})^{nt}\]So it's: \[12000=8500(1+r/12)^{12*5}\]Now just solve for r :)