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u0860867 Group Title

Pls help urgent help needed! What annual interest rate compounded annually is required to add 50% to an investment in exactly 20 years? Write your answer to 2 decimal places.

  • one year ago
  • one year ago

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  1. terenzreignz Group Title
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    Well, let's call that interest rate r... And your initial investment a.... So... \[\huge a(1+r)^{20}=1.5a\] Now solve for r.

    • one year ago
  2. u0860867 Group Title
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    thanks

    • one year ago
  3. u0860867 Group Title
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    @terenzreignz so what will the initial investment be and how did u get 1.5

    • one year ago
  4. terenzreignz Group Title
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    a is the initial investment, right? And at the end of 20 years, it has to increase by 50% so... it has to be \[\huge a + \color{blue}{<50\% \ of \ a >}=a+0.5a=1.5a\]

    • one year ago
  5. terenzreignz Group Title
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    You can take the first step and do away with the a, by dividing both sides by a... \[\huge (1+r)^n=1.5\]

    • one year ago
  6. terenzreignz Group Title
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    Sorry, replace n with 20, my bad :)

    • one year ago
  7. u0860867 Group Title
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    thanks again @terenzreignz

    • one year ago
  8. terenzreignz Group Title
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    No problem :)

    • one year ago
  9. perl Group Title
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    |dw:1367062914385:dw|

    • one year ago
  10. perl Group Title
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    which is approximately .02048 = 2.048%

    • one year ago
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