Porter and Sadie deposited 6,000.00 into a savings account which earns interest compounded monthly. After 2 years, they had 6,803.00 in the account which they used to go on a trip. What was the interest rate on the account?Round your answer to the nearest tenth of a percent.

Solution

P or t er an d S a d i e d e p os i t e d 6, 000.00 in t o a s a v in g s a cco u n t w hi c h e a r n s in t eres t co m p o u n d e d m o n t h l y . A f t er 2 ye a rs, t h ey ha d 6, 803.00 in t h e a cco u n t w hi c h t h ey u se d t o g o o n a t r i p . 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 : 6.29667 \dots %

Solution steps

Translate the problem into an equation:

6803 = 6000 (1 + \frac{r}{12})^{12 \cdot 2}

Solve for

r, 6803 = 6000 (1 + \frac{r}{12})^{12 \cdot 2} : r = 6.29667 \dots %

Rate : 6.29667 \dots %