Question

The total value of an investment was $305.33 after $240 was invested for 10 years compounded monthly. Find the interest interest rate.

Answer 1

Answer:

Interest rate = 2.41%

Step-by-step explanation:

The total value of an investment was $305.33 after $240 was invested for 10 years compounded monthly. Find the interest rate.

The formula to calculate the Interest rate for a Compound Interest is given as:

Solving for rate r as a decimal

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

r = 12 × [(305.33/240.00)^1/(12)(10) - 1]

r = 0.0240996

Then convert r to R as a percentage

R = r * 100

R = 0.0240996 * 100

R = 2.41%/year

Therefore, the Interest rate = 2.41%