You invested $635.98 and received $839.49 after two years. What was the interest rate?

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Expert Solution

Investment amount = 635.98

Future value = 839.49

N = 2 years

Future value = Investment amount * (1 + Rate)^N

839.49 = 635.98 * (1 + Rate)^2

(1 + Rate)^2 = 839.49/635.98

(1 + Rate)^2 = 1.319994

(1 + Rate) = 1.319994^0.50

(1 + Rate) = 1.1489

Rate = 1.1489 - 1

= 0.1489 or 14.89%

jeff jeffy answered 2 years ago

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