A gift of $6000 to a cuty grew to $9,000,000 in 200 years. At what interest...

Question

Question

A gift of $6000 to a cuty grew to $9,000,000 in 200 years. At what interest rate compunded annually would this growth occur?

Answer 1

Answer #1

We can use the future value formula to find interest rate.

FV = P(1+i)

Where,
FV = Future Value
P = Present Value
i = rate of return
n = number of periods

007(?+ 1)0009 = 000 000 6

9.000.000 6000 -= (1 + i)200

1500 = (1 + i)200

201500 = 1+i

1.0372428655 = 1+i

i= 1.0372428655 – 1

i = 0.0372428655

or 3.7243%.................(rounded off to 4 decimals)

Answer 2

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