Ned currently has an account balance of $3,634.51. He opened the account 13 years ago with a deposit of $2,564.65. If the interest compounds twice a year, what is the interest rate on the account?

a. 4.7%

b. 5.4%

c. 2.7%

d. 1.4%

Question

Ned currently has an account balance of $3,634.51. He opened the account 13 years ago with a deposit of $2,564.65. If the interest compounds twice a year, what is the interest rate on the account? 


a. 4.7% 

b. 5.4% 

c. 2.7% 

d. 1.4%

anonymous · Answer

use http://qrc.depaul.edu/studyguide2009/notes/savings%20accounts/compound%20interest.htm :)

anonymous · Answer

3634.51=2564.65(1+(r/2))^(2*10)
     ^current balance
                     ^principal
                                          ^rate which is what you will solve for
                                               ^ times per year it is increase aka compounded
                                                      ^times per year it is increase aka compounded
                                                              ^ nuber of years

anonymous · Answer

the idea is if the investment is compounded twice a year, each half the interest, then the owner of the bank account still gets more because the first interest also yields interest in the second term of the year
anyway yeah, you just have to use the formula posted by timo86m, and insert everything where its placeholder is!