Ten years ago, you put $150,000 into an interest-earning account. Today it is worth $275,000. What is the effective annual interest earned on the account?

Question

Quizplus · Accepted Answer

The effective annual interest rate can be calculated using the formula for compound interest: $ A = P(1 + r)^n $. Solving for $ r $ when $ A = 275,000 $, $ P = 150,000 $, and $ n = 10 $ gives approximately 6.25%.

Ten Years Ago, You Put $150,000 into an Interest-Earning Account