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Calculating the effective interest rate per year

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Jane invested $9,000 in a high yield bank account. At the end of 15 years she closed the account and received $299,000.

1. Compute the effective interest rate per year she received on the account if the interest was compounded yearly.

2. If the account was compounded quarterly, what was the nominal interest rate per year advertised by the bank?

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Solution describes the steps to calculate the effective interest rate per year in the given case.

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1. Compute the effective interest rate per year she received on the account if the interest was compounded yearly.

Present Value of Deposit=PV=$9000
Future Value of ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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