what is the interest rate on the account?9

Question

Newton currently has an account balance of $6225.18. he opened the account 15 years ago with a deposit of $4543.11. if the interest compounds daily, what is the interest rate on the account?

Answer 1

Using the formula A = P(1 + R/N)^(NT) you'd get

 

6225.18 = 4543.11(1 + R/365)^(5475)    NT = 365*15 = 5475

6225.18 / 4543.11 = (1 + R/365)^(5475) 

1.370246373 = (1 + R/365)^(5475)  take the 5475th root of both sides

1.000057534 = 1 + R/365   subtract 1 from both sides

.000057534 = R/365    multiply by 365

.02099991 = R

 

R = 2.1%