Question

Calculating Interest Rates (L03) Solve for the unknown interest rate in each of the following: Present Value Years Interest Rate Future Value $240 $2q7 360 1,080 3q,000 185,382 38.261 དུ3.618 ཟླ | པ

Answer 1

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

a.

297=240*(1+r/100)^4

(297/240)^(1/4)=(1+r/100)

(1+r/100)=1.0547

r=1.0547-1

=5.47%(Approx).

b.

1080=360*(1+r/100)^18

(1080/360)^(1/18)=(1+r/100)

(1+r/100)=1.0629

r=1.0629-1

=6.29%(Approx).

c.

185382=39,000*(1+r/100)^19

(185382/39,000)^(1/19)=(1+r/100)

(1+r/100)=1.0855

r=1.0855-1

=8.55%(Approx).

d.

531,618=38261*(1+r/100)^25

(531,618/38261)^(1/25)=(1+r/100)

(1+r/100)=1.111

r=1.111-1

=11.1%(Approx).