SOLUTION: A principal of $5000 was invested in a savings account for 4 years. If the interest earned for the period was $400, what was the annual interest rate?

Question 108305: A principal of $5000 was invested in a savings account for 4 years.
If the interest earned for the period was $400, what was the annual interest rate?

Answer by Fombitz(32388) (Show Source): You can put this solution on YOUR website!
I'm assuming compound interest, annually for 4 years.

Where A is the value at the end of 4 years.
A equals original amount plus interest.
Divide both sides by 5000.
Simplify.
Take the fourth root of both sides.

The interest rate is 1.94%.
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