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23 October, 02:44

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

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  1. 23 October, 03:03
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    Interest rate = 4.61%

    Explanation:

    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.

    FV = PV * (1+r) ^ (n)

    FV = Future Value - 106,611

    PV = Present Value - $54,200

    r - interest rate-?

    n - 15 years

    So substituting into the formula, we have

    106,611 = 54,200 * (1+r) ^15 =

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

    (1+r) ^15 = 1.96699262/15

    find the log of both sides

    15 log (1+R) = log 1.9669

    Log 1+r = log 1.9669/15

    Log 1+r = 0.019586849

    finding the log inverse

    1+r = 1.046132872

    r = 1.046132872 - 1

    = 4.61%
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Home » Business » 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
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