SOLUTION: Determine the rate of interest for a sum that becomes 343/216 times itself in 3 years interest compounded annually.

Click here to see ALL problems on Miscellaneous Word Problems

Question 996410: Determine the rate of interest for a sum that becomes 343/216 times itself in 3 years interest compounded annually.
Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website!
f = p * (1+r)^n

if you divide both sides of this equation by p, you will get:

f/p = (1+r)^n

f = future value
p = present value
r = annual interest rate
n = number of years

in your problem:

f = 343
p = 216
n = 3

f/p = (1+r)^n becomes 343/216 = (1+r)^3

take the cube root of both sides of this equation to get:

(343/216)^(1/3) = 1+r

subtract 1 from both sides of this equation to get:

(343/216)^(1/3) - 1 = r

solve for r to get:

r = .1666666667

343/216 = (1+r)^n becomes:

343/216 = (1.1666666667)^3

simplify to get:

1.587962965 = 1.587962963

this confirms the solution is correct.

annual interest rate is 16 and 2/3 %.