SOLUTION: Determine the rate of interest for a sum that becomes 343/216 times itself in 3 years interest compounded annually.
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Question 996410: Determine the rate of interest for a sum that becomes 343/216 times itself in 3 years interest compounded annually.
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
f = p * (1+r)^n
if you divide both sides of this equation by p, you will get:
f/p = (1+r)^n
f = future value
p = present value
r = annual interest rate
n = number of years
in your problem:
f = 343
p = 216
n = 3
f/p = (1+r)^n becomes 343/216 = (1+r)^3
take the cube root of both sides of this equation to get:
(343/216)^(1/3) = 1+r
subtract 1 from both sides of this equation to get:
(343/216)^(1/3) - 1 = r
solve for r to get:
r = .1666666667
343/216 = (1+r)^n becomes:
343/216 = (1.1666666667)^3
simplify to get:
1.587962965 = 1.587962963
this confirms the solution is correct.
annual interest rate is 16 and 2/3 %.
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