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Here is the question: Noha is investing ${$}2517$ in an account compounded monthly. She wants to have ${$}3000$ in $3$ years for a trip to Europe. What interest rate, to the nearest hundredth of a percent, compounded monthly, does she need?

I know that I need to use the formula $A=P(1+i)^{n}$

Here is how I substituted all my given values: $3000=2517[1+ (i/12)]^{36}$

I need assistance on how to find the interest rate, we never learned how to do that in class.

Dunja Elez
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    You can solve the equation by first dividing by 2517 (both sides) then taking the 36th root of both sides. That'll leave you with # = 1 + i/12 which hopefully you can solve? – TravisJ Apr 11 '15 at 01:26

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You're on the right track.

$$\frac{3000}{2517} = (1 + \frac{i}{12})^{36}$$ $$ \sqrt[36]{\frac {3000}{2517}} = (1 + \frac{i}{12}) $$ $$1.0048 \approx 1 + \frac{i}{12}$$ $$0.0048 \approx \frac{i}{12}$$ $$0.0587 \approx i$$

Then, multiply by 100 to get the percentage value:

$$i \approx 5.87\%$$

Shrey
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