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Type the correct answer in the box. Sam put $2,000 in a savings account at his bank. After 10 years, his account balance was $4,000. The interest rate on the savings deposit is %. (hint: use the rule of 70 to solve this problem. ).

Answer :

Ayunego

Sam put $2,000 in a savings account The interest rate on the savings deposit is 7.18 %.

Assuming compound interest, the formula for the future value is:

FV = PV (1 + r)ⁿ

Where:

PV = present value

r = interest rate per period

n = number of periods

Parameters given in the problem:

PV = $2,000

FV = $4,000

n = 10

Plug these parameters into the formula:

4,000 = 2,000 (1 + r)¹⁰

(1 + r)¹⁰ = 4000/2000

(1 + r)¹⁰ = 2

1 + r = 1.0718

r = 1.0718 - 1 = 0.0718 = 7.18%

Hence, the interest rate is 7.18%

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