Question 920350: ind the interest rate needed for an investment of $5,000 to grow to an amount of $5,500 in 6 months if interest is compounded monthly
Answer by lwsshak3(11628)   (Show Source):
You can put this solution on YOUR website! Find the interest rate needed for an investment of $5,000 to grow to an amount of $5,500 in 6 months if interest is compounded monthly.
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compound interest formula: A=P(1+r/n)^nt, P=initial investment, r=interest rate, n=number of compounding periods per year, A=amount after t-years.
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For given problem:
P=$5000
r=?
n=12
A=$5500
t=0.5
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5500=5000(1+r/12)^(12*0.5)
5500/5000=(1+r/12)^6
1.1=(1+r/12)^6
raise both sides to the (1/6) power
1.0160=1+r/12
r/12=.0160
r=12*.0160=0.192
Interest rate=19.2%
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