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30 March, 14:13

Newton currently has an account balance of $6225.18. He opened the account 15 years ago with a deposit of $4543.11. If the interest compounds daily, what is the interest rate on the account?

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  1. 30 March, 16:31
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    Formula of the daily compound interest:

    A = P. e^ (r. t), where P is the initial investment, r = interest rate, t = number of years e = 2.718 and A = final amount

    6,225.18 = 4,543.11 (e) ^ (r. 15)

    (e) ^ (r. 15) = 6,225.18/4,543.11

    (e) ^ (r. 15) = 1.3702046

    ln[ (e) ^ (r. 15) ] = ln (1.3702046)

    15. r = 0.314991

    And r = 0.314491/15 = 0.020 OR 2%
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