Answer:
20.76%
Step-by-step explanation:
[tex]33000=8000(1+\frac{i}{4})^{4*7}\\4.125=(1+\frac{i}{4})^{28}\\\sqrt[28]{4.125}=1+\frac{i}{4} \\i= .207648169[/tex]
which rounds to 20.76%
Answer:
About 0.2076 or 20.76%.
Step-by-step explanation:
Recall that compound interest is given by the formula:
[tex]\displaystyle A=P\left(1+\frac{r}{n}\right)^{nt}[/tex]
Where A is the final amount, P is the principal, r is the interest rate, n is the number of times the interest is applied per year, and t is the number of years.
Since Hannah wants to turn an $8,000 investment into $33,000 in seven years compounded quarterly, we want to solve for r given that P = 8000, A = 33000, n = 4, and t = 7. Substitute:
[tex]\displaystyle \left(33000\right)=\left(8000\right)\left(1+\frac{r}{4}\right)^{(4)(7)}[/tex]
Simplify and divide both sides by 8000:
[tex]\displaystyle \frac{33}{8}=\left(1+\frac{r}{4}\right)^{28}[/tex]
Raise both sides to the 1/28th power:
[tex]\displaystyle \left(\frac{33}{8}\right)^{{}^{1}\! / \! {}_{28}}= 1+\frac{r}{4}[/tex]
Solve for r. Hence:
[tex]\displaystyle r= 4\left(\left(\frac{33}{8}\right)^{{}^{1}\! / \! {}_{28}}-1\right)[/tex]
Use a calculator. Hence:
[tex]r=0.2076...\approx 0.2076[/tex]
So, the quarterly rate of interest must be 0.2076, or about 20.76%.
