anonymous
  • anonymous
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.
Mathematics
chestercat
  • chestercat
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terenzreignz
  • terenzreignz
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.
anonymous
  • anonymous
thanks
anonymous
  • anonymous
@terenzreignz so what will the initial investment be and how did u get 1.5

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terenzreignz
  • terenzreignz
a is the initial investment, right? And at the end of 20 years, it has to increase by 50% so... it has to be \[\huge a + \color{blue}{<50\% \ of \ a >}=a+0.5a=1.5a\]
terenzreignz
  • terenzreignz
You can take the first step and do away with the a, by dividing both sides by a... \[\huge (1+r)^n=1.5\]
terenzreignz
  • terenzreignz
Sorry, replace n with 20, my bad :)
anonymous
  • anonymous
thanks again @terenzreignz
terenzreignz
  • terenzreignz
No problem :)
perl
  • perl
|dw:1367062914385:dw|
perl
  • perl
which is approximately .02048 = 2.048%

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