SOLUTION: Please help with the homework: At what compound interest rate per annum must money be invested if the principal must treble in ten years and interest is calculated monthly.

Algebra ->  Finance -> SOLUTION: Please help with the homework: At what compound interest rate per annum must money be invested if the principal must treble in ten years and interest is calculated monthly.       Log On


   

Question 1196091: Please help with the homework:
At what compound interest rate per annum must money be invested if the principal must treble in ten years and interest is calculated monthly.
Answer by ikleyn(52772) About Me  (Show Source):
You can put this solution on YOUR website!
.
Please help with the homework:
At what compound interest rate per annum must money be invested
if the principal must treble in ten years and interest is calculated monthly.
~~~~~~~~~~~~~~~~~~ 

Let "r" be the compound interest rate per annum.

Start from the formula for the future value

    3 = %281%2Br%2F12%29%5E%2810%2A12%29 = %281%2Br%2F12%29%5E120


Take logarithm base 10 of both sides of the equation

    log(3) = 120*log(1+r/12).


Find log(1+r/12) = log%28%283%29%29%2F120 = 0.00397601.


It gives  1 + r = 10%5E0.00397601 = use your calculator = 1.009197137.


Hence,  r/12 = 1.009197137 - 1 = 0.009197137;  then  r = 12*0.009197137 = 0.110365644 = 0.1104 (rounded).


ANSWER.  The needed compound interest rate is about  11%  per annum (rounded).

Solved.