How do you find the required annual interest rate, to the nearest tenth of a percent, for $898 to grow to $1511 if interest is compounded monthly for 2 years?

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Answer 1 · 2015-10-17T00:09:16

Set up equation, then solve for i.

#898(1+i/12)^(12*2)=1511#

#(1+i/12)^24=1511/898#

Now exponentiate each side of the equation by #1/24#

#[(1+i/12)^24]^(1/24)=(1511/898)^(1/24)#

#(1+i/12)=(1511/898)^(1/24)#

Now solve for i:

#i=[(1511/898)^(1/24) -1]*12=0.263 or 26.3%#

hope that helped