Question

Jack needs $6100 in 6 years from today to buy a holiday. He invests $2400 today....

Jack needs $6100 in 6 years from today to buy a holiday. He invests $2400 today. Find the effective annual rate of interest that Jack needs to earn on this amount (as a %, 2 decimal places) in order to reach his goal.
(Solve using excel =RATE function; Answer in percentage to two decimals without the % sign e.g. 1.888 is 1.89)

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Homework Answers

Answer #1

Given

Nper= 6 years

Present value = $2400

Future value = $6100

Using excel :

Effective annual rate = rate(6,0,2400,-6100,0)

                     = 16.82%

Effective annual rate of that jack needs to earn $6100 is 16.82

Using Financial calculator:

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