Question

Suppose you deposit $1,111.00 into an account 7.00 years from today. Exactly 14.00 years from today...

Suppose you deposit $1,111.00 into an account 7.00 years from today. Exactly 14.00 years from today the account is worth $1,689.00. What was the account's interest rate? Percentage Round to: 3 decimal places (Example: 9.243%, % sign required. Will accept decimal format rounded to 5 decimal places (ex: 0.09243))

Homework Answers

Answer #1

Future Value:
FV = PV (1+r)^n
Where r is Int rate per period
n - Time Gap

Particulars Amount
Present Value $       1,111.00
Future Value $       1,689.00
Periods 7

Future Value = Cash Flow * ( 1 + r )^n
$ 1689 = $ 1111 ( 1 + r ) ^ 7
( 1 + r ) ^ 7 = $1689 / $1111
( 1 + r ) ^ 7 = 1.5203
( 1 + r ) = 1.5203 ^ ( 1 / 7 )
( 1 + r ) = 1.0617
r = 1.0617 - 1
r = 0.0617 i.e 6.17 %

Int Rate is 6.17% per anum

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