Jeffrey deposited 700.00 into a new savings account that earns interest compounded annually. After 8 years, the balance in the account was 1,464.00. What was the interest rate on the account?Round your answer to the nearest tenth of a percent.

Solution

J e ff rey d e p os i t e d 700.00 in t o a n e w s a v in g s a cco u n t t ha t e a r n s in t eres t co m p o u n d e d ann u a ll y . A f t er 8 ye a rs, t h e ba l an ce in t h e a cco u n t w a s 1, 464.00. Wha t w a s t h e in t eres t r a t e o n t h e a cco u n t ? R o u n d yo u r an s w er t o t h e n e a res t t e n t h o f a p erce n t .

Rate : 9.66180 \dots %

Solution steps

Translate the problem into an equation:

1464 = 700 (1 + \frac{r}{1})^{1 \cdot 8}

Solve for

r, 1464 = 700 (1 + \frac{r}{1})^{1 \cdot 8} : r = 9.66180 \dots %

Rate : 9.66180 \dots %