Question

What is the interest rate if a principal of $602 earns $95.88in interest compounded annually in five years?

Answer 1

Future value= principal+interest
Fv=602+95.88=697.88 now the future value in known
To find r set the equation and solve for r
Fv=p(1+r)^n
697.88=602(1+r)^5
697.88/602=(1+r)^5
R=(697.88/602)^(1/5)]-1
R=2.99%