Here's the question you clicked on:

55 members online
  • 0 replying
  • 0 viewing

u0860867

  • 3 years ago

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.

  • This Question is Closed
  1. terenzreignz
    • 3 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

    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.

  2. u0860867
    • 3 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    thanks

  3. u0860867
    • 3 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    @terenzreignz so what will the initial investment be and how did u get 1.5

  4. terenzreignz
    • 3 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

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

  5. terenzreignz
    • 3 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

    You can take the first step and do away with the a, by dividing both sides by a... \[\huge (1+r)^n=1.5\]

  6. terenzreignz
    • 3 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

    Sorry, replace n with 20, my bad :)

  7. u0860867
    • 3 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    thanks again @terenzreignz

  8. terenzreignz
    • 3 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

    No problem :)

  9. perl
    • 3 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

    |dw:1367062914385:dw|

  10. perl
    • 3 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

    which is approximately .02048 = 2.048%

  11. Not the answer you are looking for?
    Search for more explanations.

    • Attachments:

Ask your own question

Sign Up
Find more explanations on OpenStudy
Privacy Policy