SOLUTION: find the interest rate to the nearest hundredth of a percent that will produce $3500, if $2000 is left at interest compounded quarterly for 4.5 yr.

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Question 761177: find the interest rate to the nearest hundredth of a percent that will produce $3500, if $2000 is left at interest compounded quarterly for 4.5 yr.
Answer by lwsshak3(11628) About Me  (Show Source):
You can put this solution on YOUR website!
find the interest rate to the nearest hundredth of a percent that will produce $3500, if $2000 is left at interest compounded quarterly for 4.5 yr.
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Compound Interest Formula:
A=P(1+i)^n, P=initial investment, i=interest rate per period, n=number of periods, A=amount after n periods.
For given problem:
P=$2000
i=?
n=4*4.5=18
A=$3500
..
3500=2000%281%2Bi%29%5E18
3500%2F2000=%281%2Bi%29%5E18
7%2F5=%281%2Bi%29%5E18
take log of both sides
log(7/5)=18log(1+i)
log(1+i)=log(7/5)/18=0.008118
1+i=10^0.008118=1.0189
i=1.0189-1=0.0189
i≈1.89%