If Nick has $2,500 to invest and he wants to invest in a program that compounds twice a year so that he will have $3,000 in 3 years, what rate of interest must he find for his investment to be successful?

A. 0.062%
B. 3.16%
C. 6.2%
D. 1.2%

Question

If Nick has $2,500 to invest and he wants to invest in a program that compounds twice a year so that he will have $3,000 in 3 years, what rate of interest must he find for his investment to be successful?

A. 0.062%
B. 3.16%
C. 6.2%
D. 1.2%

anonymous · Answer

It looks to be 6.2%
 
2500 * (1+0.062/2)^6 = 3,002.50
 
Formula:
 Principal * [1 + (Interest rate in decimal form) / (Number of times it compounds a year)]^[(Number of years) * Number of times it compounds a year]=A.