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andreyandreev [35.5K]
3 years ago
11

2.June Cunningham deposited $54,200 in the bank on January 1, 2006. On January 2, 2016, this deposit has accumulated to $106,611

. Interest is compounded annually on the account. What rate of interest did June earn on the deposit
Business
1 answer:
cupoosta [38]3 years ago
3 0

Answer:

Interest rate= 4.61%

Explanation:

<em>The future value of an investment is the accumulated sum(principal plus interest ) after being invested at a particular rate for certain period of time.</em>

FV = PV × (1+r)^(n)

FV =Future Value - 106,611

PV =  Present Value -$54,200

r- interest rate- ?

n- 15 years

<em>So substituting into the formula, we have</em>

106,611= 54,200 × ( 1+r)^15 =

(1+r)^15= 106,611/54200

(1+r)^15= 1.96699262/15

<em>find the log of both sides</em>

15 log (1+R) = log 1.9669

Log 1+r = log 1.9669/15

Log 1+r          = 0.019586849

<em>finding the log inverse </em>

1+r = 1.046132872

r = 1.046132872 -1

= 4.61%

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