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Compounded Interest

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) An investment of $37,000 was deposited in the bank. Interest was computed on a semiannual basis and was kept there for 10 years. If the maturity value of this investment is $74,000, at what interest rate was it invested?

  • Compounded Interest - ,

    20 periods
    every period amount is multiplied by (1+r)
    where r = half the percent rate/100
    74,000 = 37,000 (1+r)^20
    2 = (1+r)^20
    log 2 = 20 log(1+r)

    log(1+r) = .01505

    1+r = 10^.01505 = 1.03526
    r = .035
    2r = .07 or 7%

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