Question

Solve for the unknown interest rate in each of the following: (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Present Value				Years			Interest Rate				Future Value
	$	730			5				%			$	1,411
		920			6								1,748
		16,500			17								143,332
		71,800			20								315,815

Answer 1

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

1.

1411=730*(1+r/100)^5

(1411/730)^(1/5)=(1+r/100)

(1+r/100)=1.1409

r=(1.1409-1)*100

=14.09%(Approx).

2.

1748=920(1+r/100)^6

(1748/920)^(1/6)=(1+r/100)

(1+r/100)=1.1129

r=(1.1129-1)*100

=11.29%(Approx).

3.

143,332=16500(1+r/100)^17

(143,332/16500)^(1/17)=(1+r/100)

(1+r/100)=1.1356

r=(1.1356-1)*100

=13.56%(Approx).

4.

315815=71800(1+r/100)^20

(315815/71800)^(1/20)=(1+r/100)

(1+r/100)=1.0769

r=(1.0769-1)*100

which is equal to

=7.69%(Approx).