Question

Norris currently has an account balance of $3,703.05. He opened the account 25 years ago with a deposit of $1,725.95. If the interest compounds monthly, what is the interest rate on the account? (3 points)

Answer 1

Answer:

R = 3.057% per year

Step-by-step explanation:

This is a compound interest question

From the question, we have the following information

P = Principal = $1,725.95.

A = Amount after 25 years = $3,703.05

T = Time = 25 years

n = Compounding frequency = compounded monthly = 12

r = interest rate = ???

The formula to calculate the interest rate in a compound interest question =

r = n[(A/P)^1/nt - 1]

r = 12[($3,703.05/$1,725.95)^1/12× 25 - 1]

r = 3.057%

Therefore, the interest rate on the account is 3.057%