Ann deposited $1,000 in a bank account,and 10 years later she closes out the account,which is worth $2,000.What annual rate of interest has she earned over the 10 years?

Question

Quizplus · Accepted Answer

The formula for compound interest is A = P(1 + r/n)^(nt). Here, A is the amount ($2,000), P is the principal ($1,000), r is the annual interest rate, n is the number of times interest is compounded per year (assuming once for simplicity), and t is the time in years (10). Solving for r gives approximately 7.18%.

Ann Deposited $1,000 in a Bank Account,and 10 Years Later