These are sample practice MCQs created for exam preparation. These are NOT official exam questions.
An investment of $5,000 grows to $6,050 after 2 years with interest compounded annually. What is the annual interest rate?
Question:
An investment of $5,000 grows to $6,050 after 2 years with interest compounded annually. What is the annual interest rate?
An investment of $5,000 grows to $6,050 after 2 years with interest compounded annually. What is the annual interest rate?
Options
Answer: (C) 10%
Explanation:
Using A = P(1 + r)²: 6,050 = 5,000(1 + r)². So (1 + r)² = 1.21, giving 1 + r = 1.1, thus r = 0.10 or 10%.
Explanation:
Using A = P(1 + r)²: 6,050 = 5,000(1 + r)². So (1 + r)² = 1.21, giving 1 + r = 1.1, thus r = 0.10 or 10%.
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