# You invest \$500 in an account that earns interest compounded monthly. Use a table or graph to find the least annual interest rate (to the nearest tenth of a percent) that the account would have to...

You invest \$500 in an account that earns interest compounded monthly. Use a table or graph to find the least annual interest rate (to the nearest tenth of a percent) that the account would have to earn if you want to have a balance of \$600 in 4 years.

txmedteach | Certified Educator

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It sounds like they want you to take a stab at what you would get in 4 years from \$500 at different interest rates compounded monthly. You'll need to use the discrete compounding equation here:

`A = P(1+r/n)^(nt)`

Here, A is the future value of the money, P is the principle (original amount you put in, \$500), r is the annual interest rate, n is the number of intervals in the year that you are compounding (here, 12 because monthly), and t is the number of years (4).

Plugging in all of the numbers gets you the following relation with respect to rate:

` `

`A = 500(1+r/12)^(12*4)`

`A =...

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