What is the interest rate if a principal of $602 earns $95.88in interest compounded annually in five years?

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alexmonreal181 alexmonreal181

03-02-2017
Mathematics

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What is the interest rate if a principal of $602 earns $95.88in interest compounded annually in five years?

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Aliwohaish12 Aliwohaish12 · Answer 1 · 2017-02-03T17:48:01+01:00

Aliwohaish12 Aliwohaish12

03-02-2017

Future value= principal+interest
Fv=602+95.88=697.88 now the future value in known
To find r set the equation and solve for r
Fv=p(1+r)^n
697.88=602(1+r)^5
697.88/602=(1+r)^5
R=(697.88/602)^(1/5)]-1
R=2.99%

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