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Answered

If$2500was invested 6 years ago, andtheinterestwascompoundedquar-terly,whatwastheinterestrateifthecurrentvalueis$3425?

Answer :

Answer:

The interest rate was 5.24%.

Step-by-step explanation:

You can use the following formula to calculate the interest rate:

i=n*((A/P)^1/nt-1), where:

i= interest rate

n= number of times interest is compounded= 4

A=value of investment= 3425

P= principal= 2500

t=time= 6

Now, you can replace the values on the formula:

i=4*((3425/2500)^1/4*6-1)

i=4*(1.37^1/24-1)

i=4*0.0131

i=0.0524

According to this, the answer is that the interest rate was 5.24%.

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