What is the annual rate of interest by the bank on Edwin鈥檚 deposit?

Edwin deposited a check of $12,375.93 in a bank and after 2 months having no other transaction his account was $12,500. The bank pays interest rate compounded every month.|||Annual rate of interest in percent鈥攛:


$12,375.93(1 + [x/100]/12)虏 = $12,500


12,375.93(1 + 0.00083333333x)虏 = 12,500


12,375.93(1 + 0.00166666667x + 0.00000069444x虏) = 12,500


12,375.93 + 20.6265499174x + 0.00859434082x虏 = 12,500


0.00859434082x虏 + 20.6265499174x = 124.07


x虏 + 2,400.01535305x = 14,436.2438723


x虏 + 1,200.00767652x = 14,436.2438723 + 1,200.00767652虏


x虏 + 1,200.00767652x = 14,436.2438723 + 1,440,018.4237


(x + 1,200.00767652)虏 = 1,454,454.66757


x + 1,200.0077 = 1,206.0077


x = 6





Answer: 6% is the annual rate of interest鈥斅hew!|||12500 / 12375.93 / 2 = 1.01 x 12 = 6.06% Annually.








Breakdown:





Devide the new balance (12500) by the deposit, to find out the percent increase of the last two months, then devide by 2 to find the percent increase per month, then multiply by 12 to work out the anual percent increase.








ANSWER IS = 6%





Hope this helps!