Question

Solving for Interest Rate per Period

Scarlett has $27,500 available today to invest for 20 years. Scarlett desires an investment fund balance of $100,000 at that time. What interest rate (compounded annually) must Scarlett earn to reach the desired balance in 20 years?

• Round the percentage point to two decimal points (for example, enter 60.42 for 60.42444%).

Please tell me how to use Excel and financial calculator to get the answer. Thank you very much.

Answer 1

B 1 Using Excel 2 Present Value $ 3 No. of years 4. Future Value $ 5 Interest rate 27,500 20 100,000 6.67% 6 Using Financial Calculator 8 No. of Periods / Year 12 9 # of periods 240 10 Present Value $ (27,500) 11 Future Value $ 100,000 12 13 2nd - FV 14 2nd - I/Y 1 2 ENTER 15 CEC - CEC 20 N 16 27500 - PV 17 100000 FV 18 CPT - I/Y 19

А 1 2 Present Value 3 No. of years 4. Future Value 5 Interest rate Using Excel 27500 20 100000 =RATE(B3-B2,B4,0)

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