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Assume that $4,000 I deposited into an investment account doubled in value over a six year period. What annual interest rate must I have earned over this period? Is the initial amount of the deposit relevant to the calculation of the annual interest rate? Why or why not?

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madethisfortwitch1

Answer:

Interest rate is about 12.246%

The initial deposit doesn't matter because when you divide both sides by the initial deposit you're always left with (1+i)ⁿ=2

Step-by-step explanation:

[tex]4000(1+i)^6=8000\\(1+i)^6=2\\1+i=\sqrt[6]{2} \\1+i=1.122462048\\i=.12246[/tex]

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