Question

Calculating Interest Rates: Solve for the unknown interest rate in each of the following:

Present Value	Years	Interest Rate	Future Value
217	3		293
432	10		1,053
41,000	16		162,181
54,382	19		483,500

Calculating Future Values: Compute the future value of $3550 compounded annually for

a. 10 years at 6%

b. 10 years at 8%

c. 20 years at 6%

d. Why is the interest earned in part (c) not twice the amount earned in part (a)?

Answer 1

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Statementshowing Computations

Paticulars

a)

293 = 217(1+r/100)^3

1.3502 = (100+r/100)^3

1.1053 = (100+r)/100

110.53 = 100 + r

r = 10.53%

b)

432 = 1053(1+r/100)^10

2.4375 = (1+r/100)^10

1.0932 = (100 +r)/100

109.32 - 100 =r

r = 9.32%

c)

162,181 = 41000(1+r/100)^16

3.9556 = (1+r/100)^16

1.0897 = (100 +r)/100

108.97 = 100 + r

r = 8.97%

d)

483500 = 54382(1+r/100)^19

8.8908 = (100 +r/100)^19

1.1219 = (100 +r)/100

112.19 - 100 =r

r = 12.19%