Question

In: Finance

Two years ago you deposited $705 into an new investment account that earns interest every month....

Two years ago you deposited $705 into an new investment account that earns interest every month. What is the interest rate needed, expressed as an APR (compounded monthly), if the account will have twice as much money three years from today (i.e., the balance will have doubled from your initial deposit). Enter your answer in decimal format, rounded and expressed to the nearest 4 decimal places (e.g., 0.12345 should be entered as 0.1235 and not anything else).

Solutions

Expert Solution

Answer : 23.2081

Calculation :

A = P * (1+r)^n

where,

A = 705 * 2 ==> 1405

P = 705

n = 3* 12 ==> 36

1405 = 705 * (1+r)^36

By solving,

R = 0.019340052

Rate (APR) = 23.2081%

jeff jeffy answered 2 years ago
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