An amount of $14,000.00 is deposited into an account today, it is expected to increase to...

An amount of $14,000.00 is deposited into an account today, it is expected to increase to a maturity value of $18,152.83 in 8.5 years from now. What is the nominal interest rate compounded monthly? Round the answer to two decimal places.

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Expert Solution

Compound Interest:

Amount = P (1 + i/k)^(n*k)

where, P = Principal

i = Rate of interest per annum

k = Number of Compoundings in a year

n = Number of years

Therefore, 18,152.83 = 14,000 (1 + i/12)^(8.5*12)

18,152.83 = 14,000(1 + i/12)^102

On solving the above equation, we get i = 3.06%

Therefore, nominal interest rate = 3.06% per annum.

jeff jeffy answered 2 years ago

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