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Question 436853: I have an investment of $1500. After 4 years, it becomes $1700. The number of compounding periods are 360. What is my rate?
I do not know how to go from my last step and find an answer.
This is what I have so far, but do not know how to go from here. It is very confusing to me.
1700=1500(1+ r/360)^360 x 4
1700=1500(1+ r/360)^1280
ln(1+r/360)^1280=ln(17/15)
1280ln(1+r/360)=ln(17/15)
ln(1+r/360)=ln(17/15) all over 1280
=1/1280ln(17/15)
=ln(17/15)^1/1280
r=360[((17/15)^1/1280)-1]
This is where I do not understand how to go. I have tried to divide 17 by 15 giving me 1.13, then taking that to the power of 1/1280, giving me 8.9, then subtracting 1, which gives me a -.9991145833.
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! I have an investment of $1500. After 4 years, it becomes $1700. The number of compounding periods are 360. What is my rate?
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If in 4 years you are compounding 360 times, you are
compounding 90 times each year. That is "n" in the
compounding formula.
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A(t) = P(1+(r/n))^(nt)
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1700 = 1500(1+r/90))^(90*4)
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17/15 = (1+(r/90)^(360)
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Take the 360 root of both sides to get:
1+(r/90) = 1.000348
r/90 = 0.000348
rate = 0.0313
rate = 3.13%
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Cheers,
Stan H.
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