SOLUTION: What interest rate would be necessary to obtain $6500 in 8 years if $5000 is the amount of the original investment and the interest is compounded yearly?
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Question 1193733: What interest rate would be necessary to obtain $6500 in 8 years if $5000 is the amount of the original investment and the interest is compounded yearly?
the interest rate needed is ______ %
(Do not round until the final answer. Then round to the nearest tenth as needed.) Answer by ikleyn(52777) (Show Source):
You can put this solution on YOUR website! .
What interest rate would be necessary to obtain $6500 in 8 years if $5000 is the amount of the original investment and the interest is compounded yearly?
the interest rate needed is ______ %
(Do not round until the final answer. Then round to the nearest tenth as needed.)
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Use the formula for the future value of an account compounded yearly
6500 =
Your task is to determine the unknown rate "r" from this equation.
For it, divide both sides by 5000
=
1.3 =
take logarithm base 10 of both sides
log(1.3) = 8*log(1+r)
and express
log(1+r) = = 0.014243.
It means that
1 + r = = 1.03334,
which implies r = 0.03334 = 3.334%. ANSWERCHECK. = 6500.04 dollars (which is close enough to the precise future value of $6500).
Solved.
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To see many similar and different solved problems, look into this lesson
- Problems on discretely compound accounts
in this site, and learn the subject from there.
