Question

Newton currently has an account balance of $6225.18. He opened the account 15 years ago with a deposit of $4543.11. If the interest compounds daily, what is the interest rate on the account?

Answer 1

Formula of the daily compound interest:
A = P.e^(r.t), where P is the initial investment, r = interest rate, t = number of years e= 2.718 and  A = final amount

6,225.18= 4,543.11(e)^(r.15)

(e)^(r.15) = 6,225.18/4,543.11

(e)^(r.15) = 1.3702046

ln[(e)^(r.15)] = ln(1.3702046)

15.r = 0.314991

And r = 0.314491/15 = 0.020 OR  2%