How to Solve Interest Rate Problems

Subtract the final value of the account from the amount that was originally put in the account. For example, if the account started with $500 and grew to $650 over four years, you would subtract $500 from $650 to get $150.

Divide the increase by the original amount. In this example, you would divide $150 by $500 to get 0.3.

Add 1 to the step 1 result. In this example, you would add 1 to 0.3 to get 1.3.

Divide 1 by the number of years the money remained in the account. In this example, since the money remained in the account for four years, you would divide 1 by 4 to get 0.25.

Raise the step 3 result to the power of step 4. Continuing the example, you would raise 1.3 to the 0.25th power to get 1.067789972.

Subtract 1 from step 5 result to find the annual interest rate. Finishing this example, you would subtract 1 from 1.067789972 to get 0.067789972, meaning the annual interest rate is about 6.78 percent.