Find the interest rate needed for an investment of $4,000 to grow to an amount of $8,500 in 3 year(s) if interest is compounded monthly. Round your answer to two decimal places.

Question

Find the interest rate needed for an investment of $4,000 to grow to an amount of $8,500 in 3 year(s) if interest is compounded monthly. Round your answer to two decimal places. ​

Quizplus · Accepted Answer

We can use the formula A = P(1 + r/n)^(nt) where A is the final amount, P is the initial amount, r is the interest rate, n is the number of times compounded per year, and t is the number of years. Plugging in the given values, we get 8500 = 4000(1 + r/12)^(36). Solving for r, we get r = 0.25385, which rounds to 25.39%. Therefore, the best choice is B.

Find the Interest Rate Needed for an Investment of $4,000