Solve the problem.
-What is the rate on an investment that triples $4336 in 27 years? Assume interest is compounded monthly.
A) 3.4%
B) 5.1%
C) 4.1%
D) 2.7%

Question

Quizplus · Accepted Answer

The formula for compound interest is $A = P(1 + \frac{r}{n})^{nt}$, where $A$ is the amount of money accumulated after $n$ years, including interest, $P$ is the principal amount (the initial amount of money), $r$ is the annual interest rate (decimal), $n$ is the number of times that interest is compounded per year, and $t$ is the time the money is invested for in years. In this case, we want to find $r$ when $A = 3P = 3 \times 4336$, $n = 12$ (since interest is compounded monthly), and $t = 27$ years. Rearranging the formula to solve for $r$ and substituting the given values, we find that $r \approx 0.041$ or $4.1\%$.

Solve the Problem. -What Is the Rate on an Investment That Triples $4336