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If you deposit $1000 in a savings account with an interest rate of r compounded annually, then the balance in the account after 3 years is given by the function 649-04-04-00-00_files/i0120000.jpg, where r is written as a decimal.

What is the formula for the interest rate, r; required to achieve a balance of B in the account after 3 years?
 Sep 17, 2013
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The link you posted isn't really working so I'm just going to assume that the function you're referring to is the standard formula for compounded interest, that is p(1+r)^x. In this case the principal amount is $1000 and x is 3. So it would look something like 1000(1+r)^3. Well in order to find the rate of annual interest if the balance after three years is B you simply have to set the formula equal to B and then isolate r.

1000(1+r)^3=B

First divide both sides by a 1000,

1000(1+r)^3=B (1+r)^3=B/1000

then cube root both sides,

(1+r)^3=B/1000 1+r=cuberoot(B)/cuberoot(1000) 1+r=cuberoot(B)/10

and then simply subtract 1 from both sides getting the final equation r=(cuberoot(B)/10) -1, which is the formula for finding the value of r given the value of B
 Sep 17, 2013

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