A sum of $8,000 invested at compound interest compounded annually amounts to $9,261 in 3 years. What is the annual interest rate?
Answer and explanation
Correct answer: A.
- Step 1: Compound interest formula: .
- Step 2: Substitute values: .
- Step 3: Take cube root of both sides: .
- Step 4: Solve for rate: .
Answer
5.0%.
Why not the others: '' would yield 9,528; '' would yield 9,129.
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