Topic: Compound interest rate homework
June 20, 2019 / By Elanor Question:
(a) (20 pts) If it takes 9 years for a one-time deposit in a savings account that receives interest compounded quarterly to triple, then what is the interest rate to the nearest tenth of a percent?
To answer this question, you may want to utilize the following relationship:
If ln(x) = N, where N is some number, then x = eN
(if using logarithms to the base 10, then equivalently,
If log(x) = N, then x = 10N )
(b) (6 pts) check your result in part a using the standard formula for computing compounded interest, assuming the initial deposit is $10,000
(c) (7 pts.) What is the APY of 7% interest compounded quarterly?