Question 417867: I am trying to find the interest rate "r" in this problem:
"At a certain constant APR over the life of the investment, Mara’s $2,000 investment grew to
$3,000 in eight years. Determine that nominal annual rate of interest (APR), knowing that the
interest rate was constant for those eight years and that interest was compounded annually."
I am using the equation:
A=P(1+r)^t
A being the final investment value, P being the initial investment value, r being the interest rate, and t being the amount of time.
I have gotten as far as this:
0.5 = r^8
I understand that to solve this, I need to use a logarithm, and so I translated it into:
8=log(r) 0.5
but I can't figure out how to solve for "r" after that.
Thank you!
Answer by scott8148(6628)   (Show Source):
You can put this solution on YOUR website! 3000 = 2000 (1 + r)^8
1.5 = (1 + r)^8
log(1.5) = 8 [log(1 + r)]
[log(1.5)] / 8 = log(1 + r)
1 + r = 10^{[log(1.5)] / 8} ___ this is the inverse of the logarithm operation
|
|
|
