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If $3800 is invested in a savings account for which interest is compounded quarterly, and if the $3800 turns into $4300 in 2 years, what is the interest rate of the savings account?

Answer :

abidemiokin

The interest rate of the savings account is 6.2%

Compound interest

The formula for calculating the compound amount is expressed as

A = P(1+r/n)^nt

Given the following parameters

P = $3800
A = $4300
t =2 years

Required

Rate

Substitute

4300 = 3800(1+r/4)^4(2)
43/38= (1+r/4)^8
1.1316 = (1+r/4)^8

Take ln of both sides

ln(1.1316) = 8ln(1+r/4)

0.01545 = ln(1+r/4)

1 + r/4 = e^0.01545

1 + r/4 = 1.01557

r/4 = 0.01557

r = 6.2%

Hence the interest rate of the savings account is 6.2%

Learn more on compound interest here: https://brainly.com/question/24924853

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