What is the annual interest rate earned on a deposit that grew from $60 to $111.06 over the last 8 years?
A)14%
B)12%
C)8%
D)6%

Question

Quizplus · Accepted Answer

To find the annual interest rate, we need to use the formula for compound interest:

A = P(1 + r/n)^(n*t)

where A is the final amount, P is the initial amount, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.

In this case, we can plug in the given values:

111.06 = 60(1 + r/1)^(1*8)

Simplifying:

111.06/60 = (1 + r)^8

Taking the eighth root:

(111.06/60)^(1/8) = 1 + r

Subtracting 1:

r = (111.06/60)^(1/8) - 1

r ≈ 0.08 or 8%

Therefore, the answer is choice C) 8%.

What Is the Annual Interest Rate Earned on a Deposit