posted by candela on .
Suppose $1,000 is compounded quarterly for 4 years. What rate is needed to reach a total of $2,000? Round to the nearest tenth of a percent.
let the quarterly rate be i
1000(1 + i)^16 = 2000
(1+i)^16 = 2
take the 16th root of both sides
1+i = 2^(1/16)
1+i = 1.04427
i = .04427
the quarterly rate is 4.427 %
the annual rate compounded quarterly is 17.7%
(time to have that mathbook updated.
a 17% interest rate is a fantasy these days)