Answer :
A savings account starts with $231 25. After 8 years of continuous compounding at an interest rate of 87.5% the account has $1850.
What is Compound interest?
Compound interest is a method of calculating the interest charge. In other words, it is the addition of interest on interest.
Compound Interest = P(1+r/n)^rt
A savings account starts with $231 25. After 8 years of continuous compounding at an interest rate the account has $1850.
Compound Interest = P(1+r/n)^rt
[tex]\rm 1850 = 231 25 (1 + r/12)^{96}[/tex]
[tex]\rm 1850 = 231 25 (1 + r/12)^{96}\\\rm 1850 /231 25 = (1 + r/12)^{96}[/tex]
r = 87.5%
Thus, the interest rate percentage is 0.87 rate per year.
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