P=500(1.035)^(n) The value, P, in dollars, of $500 invested in an account earning interest at a constant rate, compounded annually, after n years is given by the equation shown, assuming no additional investments or withdrawals are made. What is the annual interest rate on the account, in percent? (Ignore the % symbol when entering your answer. For example, if the answer is 11.2%, enter 11.2 .)

Question

P=500(1.035)^(n) The value,  P, in dollars, of  $500 invested in an account earning interest at a constant rate, compounded annually, after  n years is given by the equation shown, assuming no additional investments or withdrawals are made. What is the annual interest rate on the account, in percent? (Ignore the  % symbol when entering your answer. For example, if the answer is  11.2%, enter 11.2 .)

Bytelearn · Accepted Answer

Given formula analysis: We are given the formula for compound interest: P = 500(1.035)^(n). To find the annual interest rate, we need to look at the base of the exponent, which is 1.035 in this case. This base represents the growth factor for one year, which includes the original amount plus the interest rate. To find the interest rate, we subtract 1 from the growth factor.Calculate interest rate: Calculate the interest rate by subtracting 1 from the growth factor: Interest rate = 1.035 - 1 Interest rate = 0.035Convert to percent: Convert the interest rate from decimal form to percent form by multiplying by 100: Interest rate in percent = 0.035 * 100 Interest rate in percent = 3.5%

Full solution

More problems from Compound interest: word problems

Related topics