Question

You wish to save $9,000 at the end of 5 years by depositing in $1,000 into your savings account in Year 1, $1,400 in 2 years, $1,600 in 3 years, $1,800 in 4 years, and $1,900 in 5 years. What interest rate must you earn to reach to goal? Express your answers as a percentage. (Enter only numbers and decimals in your response. Round to 2 decimal places.)

Answer 1

By trail and error method I found the interest rate is 6%.now I will show the verification.

First year starting we will invest 1000.at end we will be with (1000+6%)= 1060

At starting of second year we will invest 1400 and we have already 1060 total of 2460.then at end we will have 2607 (2460+6%)

At third year we will invest 1600 and we have 2607.At ending we will have 4457 (4207+6%)

At fourth year we will invest 1800 and we have 4457.At end we will have 6634 (6259+6%)

At fifth year we will invest 1900 and we will have 6634.At end we will have 9046(approx to 9000) (8534+6%)