Question

If you deposit today $6,929 in an account for 6 years and at the end accumulate...

If you deposit today $6,929 in an account for 6 years and at the end accumulate $26,193, how much compound interest rate (rate of return) you earned on this investment ?

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Answer #1

We are given the following information:

Value of account at time 0 PV $       6,929.00
rate of interest r To be calculated
number of years n 6
Future value FV $     26,193.00

We need to solve the following equation to arrive at the required r

So the rate of interest is 24.81%

This can also be calculated through a financial calculator:

Inputs will be PV = -6929, FV = 26193, n = 6, PMT = 0 compute I/Y PV is negative because you have to part with it at the beginning to get the future value after 6 years

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