I'm not sure if this belongs here or not- I am taking a contemporary mathematics course this semester and I missed a day of class. The name of the title is Finding interest rates.
I already have the anwser, just need someone's help explaining how to solve the problem.
For example: Suppose you invest $10,000 on your son's 13th birthday and it accumulates to 15,000 on his 18th birthday. What annual rate of compound interest did this investment earn?
Pv=10,000 fv=15,000 t=5 years answer 8.45%
Please help me.
The compound interest formula is where
- = Final Value
- = Initial Value
- = Annualised interest rate
- = number of compounds per year
- = number of years
You know , , (it's compounded annually) and
Plug and Chug gives:
I know how to set the initial problem, but I guess what I'm asking is for the detailed steps because I cant figure it out, like how to isolate r, I think. Im so confused. Sorry math is not my thing.
I get to here.
15,000=10,000(1 + r) 5
(15,000 /10,000 -1) = r 5
don't know how to go further.
You have (1+r)^5 which is definitely not "r 5"
I have solved the equation for r in post 2 (but note that you take the 5th root before subtracting 1)
If your calculator does not have a 5th root button raise it to the power of 0.2
Thanks. I wasn't using my calculator right. I got the answer! thanks so much
REMEMBER: if a^p = b, then a = b^(1/p) ; TATTOO that on your wrist !