Question

At what effective rate of interest will the present value of $1,400 at the end of three years and $800 at the end of six years be equal to $1,500?

Answer 1

FV of both will equal

So 1400*(1+r)³ = 800*(1+r)⁶
14/8 = (1+r)³
r = (14/8)^1/3-1 = 20.51%

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