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Mr. Madoff invests 1000 dollars in a fund that compounds annually at a constant interest rate. After three years, his investment has grown to 1861 dollars. What is the annual interest rate? (Round your answer to the nearest integer.)

 Jan 6, 2022
 #1
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The annual interest rate is 2%.

 Jan 6, 2022
 #2
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Three periods      periodic interest  x   compounds each period

 

1861 = 1000 ( 1 + x)3

1861/1000 = (1+x)^3

1.23 = 1+x

x = .23 = 23%

 Jan 6, 2022

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