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
	$	755			6				%			$	1,461
		945			7								1,798
		19,000			18								145,832
		74,300			21								320,815

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.
1461=755*(1+r/100)^6

(1461/755)^(1/6)=(1+r/100)

(1+r/100)=1.1163

r=(1.1163-1)*100

=11.63%(Approx).

2.

1798=945(1+r/100)^7

(1798/945)^(1/7)=(1+r/100)

(1+r/100)=1.0962

r=(1.0962-1)*100

=9.62%(Approx).

3.

145832=19000(1+r/100)^18

(145832/19000)^(1/18)=(1+r/100)

(1+r/100)=1.1199

r=(1.1199-1)*100

=11.99%(Approx).

4.

320815=74300(1+r/100)^21

(320815/74300)^(1/21)=(1+r/100)

(1+r/100)=1.0721

r=(1.0721-1)*100

=7.21%(Approx).