Problema Solution
Mark Schultz deposited $43,200 in the bank on January 1, 2002. On January 2, 2012, this
deposit has accumulated to $84,974. Interest is compounded annually on the account. What
rate of interest did Mark earn on the deposit?
Answer provided by our tutors
A = $84,974 the future value after 10 year
P = $43,200 is the principal
t = 10 year the number of years
m = 1 the number of compounding periods per year
n = m*t = 10 the number of compounding periods
i = r/m = r interest rate per period
r = ? the annual interest rate
A = P(1 + r)^n
r = (A/P)^(1/n) - 1
r = (84974/43200)^(1/10) - 1
r = 0.06999 or 6.999%
click here to see the step by step solution of the equation
Mark earned 6.999% rate of interest on the deposit.