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Diana invested $61,293 in an account with a fixed annual percent of interest, compounding quarterly. At the end of five full years, she had $76,662.25 in principal plus interest. Approximately what was the annual percent rate of interest for this account?A. 1.2%B. 4.5%C. 10%D. 18%E. 25.2%

Respuesta :

jepessoa

Answer:

B) 4.5%

Explanation:

We are given the following information:

PV = $61,293

FV = $76,662.25

Nper = 20 (4 quarters per year x 5 years)

To find the annual interest rate we can use an excel spreadsheet and the IRR function = IRR(Nper,PV,FV) = IRR(20,61293,76662.25) = 0.01125 = 1.125%

This will give us the return rate for every period, since we have 4 periods in a year, we must multiply it by 4 = 1.125% x 4 = 4.5%

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