Question

Problem Seven Carly Simon wishes to invest $18,000 on July 1, 2017, and have it accumulate to $50,000 by July 1, 2027. Use a financial calculator to determine at what exact annual rate of interest Carly must invest the $18,000.

Answer 1

Amount of Investment = $ 18000 (July 01, 2017)

Amount to be accumulated = $ 50000 ( on July 1, 2027)

Principal = $ 18000, Period = 10 years , Amount (A) = $ 50000

Amount = Principal x (1 + rate )^(period)

50000 = 18000 x ( 1 + r ) ^ (10)

50000 / 18000 = ( 1 + r ) ^ (10)

2.7778 = ( 1 + r ) ^ (10)

1 + r = 1.107566

r = 0.107566 or 10.7566%