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What interest rate (the nearest percent) must Clarabelle earn on a $452,000 investment today so that she will have $1,140,000 after 12 years? 8%



  • Q:What is the formula for compound interest? A:The formula for compound interest is A=P(1+r/n)^(n*t), where A is the ending amount, P is the principal or starting amount, r is the interest rate, n is the number of times interest is compounded per year, and t is the time in years.
  • Q:What is P, the starting amount? A:The starting amount is $452,000.
  • Q:What is A, the amount after 12 years? A:The amount after 12 years is $1,140,000.
  • Q:What is t, the time in years? A:The time in years is 12.
  • Q:Solve for r. A:r = (n√(A/P))^1/(n*t) = (1√(1140000/452000))^1/(1*12) = 0.08