Question

Diane initially deposited $10,000 into a money market account and made no additional deposits or withdrawals. When she closed the account in exactly one year, its value had grown to $10,800. Calculate the annual growth rate for the money market account. Round your answer to two places after the decimal.

Answer 1

The annual growth rate for the money market account is 8.00%

Step-by-step explanation:

The formula to compute the annual growth rate for the money market account is shown below :

= (Increase amount after one year ÷ Initial amount) × 100 - (time period)

= ($10,800 ÷ $10,000) × 100 - 1 year

= 1.08% - 1 year

= 8.00%

For calculating the annual growth rate we have to deduct the initial amount from the amount which is increased after the one year and deduct the time period so that the fair annual growth rate can come.

Hence, the annual growth rate for the money market account is 8.00%