Find the rate of interest required to achieve the conditions set forth.
-A = $32,000 P = $8,000
T = 20 years
Compounded annually
A) 7.1773%
B) 8%
C) 3.5265%
D) 5.6467%

Question

Quizplus · Accepted Answer

The formula for compound interest is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount, r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years. Given that the interest is compounded annually (n = 1), we can simplify the formula to A = P(1 + r)^t. Plugging in the given values: 32000 = 8000(1 + r)^20. Solving for r gives us r = 7.1773%.

Find the Rate of Interest Required to Achieve the Conditions