This is a finance question - PVIFA

575 = (1-1/(1+r)^12)/r)×50

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- Jul 8th 2011, 08:48 PMNeedsHelppHaving trouble finding x
This is a finance question - PVIFA

575 = (1-1/(1+r)^12)/r)×50 - Jul 8th 2011, 09:14 PMTKHunnyRe: Having trouble finding x
Since 'x' is not in the equation, I guess it can be anything you like!

NonTrivial exercise. Try this:

1) Solve for one fo the 'r's and take a good guess.

$\displaystyle f(r) = r = \frac{50}{575}\left[1 - \frac{1}{(1+r)^{12}}\right]$

You THINK the answer might be around 8% Annual, so give a good try of r = 0.006434

f(0.006434) = 0.006441 -- I am delighted that it was so close. Do it again.

f(0.006441) = 0.006448 -- A little disappointing. It moved 7. Do it again.

f(0.006448) = 0.006455 -- Ack. It moved 7 again!

Well, it's not winning any awards for convergence, but it is getting there. Get a computer program to do more iterations. After a few hundred, it settles down to r = 0.00660 91533 89984 (Sorry, I don't know how to shut off Skype) which leads to an annual rate of around 8.225725%.

That's one way to go about it. There are others. - Jul 9th 2011, 03:28 PMNeedsHelppRe: Having trouble finding x
- Jul 9th 2011, 03:44 PMe^(i*pi)Re: Having trouble finding x
- Jul 9th 2011, 07:06 PMWilmerRe: Having trouble finding x
- Jul 9th 2011, 09:16 PMmr fantasticRe: Having trouble finding x