O You are looking at an investment that will pay $1200 in 5 years if you...

Question

Question

O You are looking at an investment that will pay $1200 in 5 years if you invest $1000 today. What is the rate of interest?

Answer 1

Answer #1

Rate of interest = 3.71%

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Statementshowing Computations

Paticulars

A = P(1+r/100)^n

1200 = 1000(1+r/100)^5

1.2 = (1+r/100)^5

1.2^(1/5) = 1+r/100

1.0371 = 1+r/100

.0371 = r/100

r = 3.71%

Answer 2

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