Sally invests $4000 in a savings account which compounds interest monthly. After 10 years, she has a balance of $5,451.52. What is the annual interest rate of the account, rounded to the nearest 0.01%?

Question

anonymous · Answer

Here is the formula to find annual interest rate$$I = P r t$$

ranga · Answer

Here is the compound interest formula: $$\Large A = P(1 + \frac{ r }{ n })^{nt}$$
A = Amount at maturity = $5,451.52
P = Principal Amount = $4,000
r = Annual interest rate in decimal
n = compounding period = 12 (because compounded monthly means 12 times a year)
t = years invested = 10

Substitute and solve for r.

anonymous · Answer

@ranga Okay that's what I had! I just wasn't sure if I was doing it right thanks!

ranga · Answer

cool.  you are welcome.