Patrick deposited 8,000.00 into a new savings account that earns interest compounded quarterly. After 7 years, the balance in the account was 15,300.00. What was the interest rate on the account?Round your answer to the nearest tenth of a percent.

Solution

P a t r i c k d e p os i t e d 8, 000.00 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 q u a r t er l y . A f t er 7 ye a rs, t h e ba l an ce in t h e a cco u n t w a s 15, 300.00. 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 : 9.37110 \dots %

Solution steps

Translate the problem into an equation:

15300 = 8000 (1 + \frac{r}{4})^{4 \cdot 7}

Solve for

r, 15300 = 8000 (1 + \frac{r}{4})^{4 \cdot 7} : r = 9.37110 \dots %

Rate : 9.37110 \dots %