If you deposit $1000 in a savings account with an interest rate of r compounded annually, then the balance in the account after 3 years is given by the function B(c) = 1000(1 + r)3, where r is written as a decimal.What interest rate will yield a balance of $1100 after 3 years?
Answer
A
3.23%
B
3.33%
C
3.63%
D
3.66%
Explanation
Set the balance equal to $1,100: 1,100 = 1,000(1 + r)^3. Dividing by 1,000 and taking the cube root gives r = ∛1.1 − 1 ≈ 0.0323, or 3.23%. The correct choice is 3.23%.
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