Question

The expression 1.021)^3t represents the interest that a credit union pays on a savings account.


What is the yearly interest rate?

Answer 1

Answer:

Yearly interest rate would be 6.3%

Step-by-step explanation:

Since, the amount formula of an investment after t years is,

$A=P(1+\frac{r}{n})^{nt}$

Where,

Expression $(1+\frac{r}{n})^{nt}$ represents change factor in the investment,

In which, r = annul rate or yearly interest rate,

n = number of compounding periods,

t = number of years,

If change factor is $(1.021)^{3t}$ or $(1+0.021)^{3t}$

Then,

By comparing,

$\frac{r}{n}=0.021, n = 3$

$\implies r = 3\times 0.021= 0.063 = 6.3\%$

Hence, yearly interest rate would be 6.3%