compound intrest

Question

alex opened a savings account 3 years ago with a starting balance of $50. Even though alex did not make any additional deposits into this account she earned additional $3.89 as interest compounded monthly. what is the approximate annual interest rate for this account?

Answer 1

Therefore, 53.89 = 50(1 + I/12)^(3)(12) or 53.89/50 = (1 + I/12)⁽³⁶⁾

(1.0778)^(1/36) = (1 + I/12) and 1.002 = 1 + I/12 or I = .025 or 2.5% interest