Biff deposited $9,000 in a bank account,and 10 years later he closes out the account,which is worth $18,000.What annual rate of interest has he earned over the 10 years?

Question

Quizplus · Accepted Answer

We can use the formula for compound interest to solve this problem:
A = P(1 + r/n)^(nt), 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, P = 9,000, A = 18,000, n = 1 (interest is compounded annually), and t = 10. We want to solve for r.

18,000 = 9,000(1 + r/1)^(1*10)
2 = (1 + r)^10
Taking the tenth root of both sides gives:
1.0718 = 1 + r
r = 0.0718 or 7.18%

Therefore, B) 7.18% is the correct answer.

Biff Deposited $9,000 in a Bank Account,and 10 Years Later