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Question 1067712: A deposit of $2700 in a savings account reaches a balance of $3136.37 after 5 years. The interest on the account is compounded monthly. What is the annual interest rate of the account? (Round your answer to the nearest whole number.)
Answer by Boreal(15235)   (Show Source):
You can put this solution on YOUR website! 3136.37=2700(1+i)^60, where i= rate divided by 12.
divide by 2700
1.1616=(1+i)^60
without rounding until the end, take logs of both sides. Some decimal places will be omitted here but round at the end.
.0651=60log (1+i)
divide by 60, both sides
0.00108=log (1+i)
raise everything to the 10th power
1.0025=1+i
subtract 1
i=0.0025
i is the rate divided by 12. Therefore, multiply by 12 to get the rate.
0.03 or 3% is the rate ANSWER
1.0025 raised to the 60th power*2700=$3136.37
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