What is the final amount of $70.00 that is put into a savings account with 16% interest rate for 25 years, if the interest is co
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Answer:
40%.
Step-by-step explanation:
We have been given that an amount of $100 compounded annually is increased to $196 in 2 years. We are asked to find the interest rate.
We will use compound interest formula to solve our given problem.
, where,
A = Final amount,
P = Principal amount,
r = Annual interest rate in decimal form,
n = Number of times interest is compounded per year,
t = Time in years.
Upon substituting our given values in above formula, we will get:
Take positive square root of both sides:
Since interest rate is in decimal, form, so we will convert it into percentage as:
Therefore, the interest rate was 40%.