Solve.
-At what interest rate must $4800 be compounded annually to equal $7091.79 after 8 yr? (Round to the nearest percent.)
A) 4%
B) 5%
C) 6%
D) 7%

Question

Quizplus · Accepted Answer

The formula for compound interest is A = P(1 + r)^n, where A is the amount of money accumulated after n years, including interest, P is the principal amount, r is the annual interest rate (decimal), and n is the time the money is invested for in years. Rearranging the formula to solve for r gives r = ((A/P)^(1/n)) - 1. Substituting the given values: r = ((7091.79/4800)^(1/8)) - 1 ≈ 0.05, which is 5% when converted to a percentage.

Solve. -At What Interest Rate Must $4800 Be Compounded Annually to to Equal