Question 791684: I am trying to figure out the interest rate (r) in a Future Value for an ordinary annuity.
The equation I have is $200,000 = $32,000 * [(1 + r)^5 - 1/r]
Note! - the '5' is the 5th power and the divisor line should be under everything within the brackets and over the last r. The bracket is a big bracket and surrounds all of which is to the right of 32,000.
I do not know how to simplify the exponent to solve this. I'm stuck. HELP QUICKLY!!!
Thank you,
Jenny S. mjamr@yahoo.com
Answer by Alan3354(69443)   (Show Source):
You can put this solution on YOUR website! $200,000 = $32,000 * [(1 + r)^5 - 1/r]
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((1 + r)^5 - 1)/r = 200/32
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There's no algebraic solution.
You have to use numerical methods, such as Newton-Raphson, or graphical methods.
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Using a graph, r =~ 0.111789081446046 =~ 11.178%
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