An account invested in a money market fund grew from ?$73,330.76 to ?73,624.98 in a month. What was the interest rate to the nearest? tenth?

Question

 This question is about interest rate, however instead of looking for the price you are looking for the rate.

Answer 1

It appears we are talking compound interest

where the interest is compounded monthly.

 

A = p(1+r/n)^nt  is the formula for compound interest.

A = final amount = 73624.98

p = principal investment = 73330.76

r = interest rate as decimal (to be found)

n = # times compounded per year = 12

t = time in years = 1/12

 

73624.98 = 73330.76(1+r/12)^12(1/12)

 

73624.98/73330.76 = 1 + r/12

73624.98/73330.76 - 1 = r/12

r = 12(73624.98/73330.76 - 1)

r ≅ .048

 

Changing the decimal to a percent the

interest rate is 4.8%