Question

Find the interest rate r compounded monthly if the principal P = $4,300 reaches the future value F = $4,720 in t = 6 years. Round your final answer to two decimal places.​

Answer 1

Answer:

  1.55%

Step-by-step explanation:

Fill in the values and solve for the rate using the future value formula.

  FV = P(1 +r/n)^(nt)

  4720 = 4300(1 +r/12)^(12·6)

  (4720/4300)^(1/72) = 1 +r/12

  r = 12(4720/4300)^(1/72) -1) ≈ 0.015542

The annual interest rate is about 1.55%.