When angela turned 10, her parents deposited $5,000 in a college fund for her. when angela enrolled in college at 18, her account had $6,800 to pay her expenses. if the account paid simple interest, what was the annual interest rate?

The annual interest rate was 4.5% in Angela's college fund.

Step-by-step explanation:

1. Let's review the data given to us for solving the question:

Investment when Angela was 10= US$ 5,000

Duration of the investment = 8 years

Balance of the account when Angela turned 18 = US$ 6,800

2. Let's find the annual interest rate of this investment after 8 years or 20 quarters, using the following formula:

FV = PV * (1 + r) ⁿ

PV = Investment when Angela turned 10 = US$ 5,000

FV = Balance of the account when Angela turned 18 = US$ 6,800

number of periods (n) = 8

Replacing with the real values, we have:

6,800 = 5,000 * (1 + r) ⁸

6,800/5,000 = (1 + r) ⁸ (Dividing by 5,000 at both sides)

34/25 = 1⁸ + r⁸

34/25 - 1 = r⁸ (1⁸ = 1)

34/25 - 25/25 =r⁸ (1 = 25/25)

9/25 =  r⁸

0.36 = r⁸ (9/25 = 0.36)

⁸√0.36 = ⁸√r⁸

0.045 = r

r = 4.5%

The annual interest rate was 4.5% in Angela's college fund.

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step-by-step explanation: