# Calculating Interest

• Sep 29th 2009, 01:38 PM
B-lap
Calculating Interest
A) Find the interest rate needed for an invesment of 22000 dollars to grow to an amount of 32750 dollars in 7 years if the interest is compounded monthly?
I got 4.98% can someone varify?

b) How long will it take 22 000 to grow to 32224 dollars if the investment eats interest at the rate of 7.5% monthly?

______ years?
• Sep 29th 2009, 02:32 PM
skeeter
Quote:

Originally Posted by B-lap
A) Find the interest rate needed for an invesment of 22000 dollars to grow to an amount of 32750 dollars in 7 years if the interest is compounded monthly?
I got 4.98% can someone varify?

b) How long will it take 22 000 to grow to 32224 dollars if the investment eats interest at the rate of 7.5% monthly?

______ years?

a) $22000\left(1 + \frac{.0498}{12}\right)^{84} = 31153.32881$

b) $32224 = 22000\left(1+ \frac{.075}{12}\right)^{12t}$

solve for $t$
• Sep 29th 2009, 02:59 PM
pflo
Quote:

Originally Posted by B-lap
A) Find the interest rate needed for an invesment of 22000 dollars to grow to an amount of 32750 dollars in 7 years if the interest is compounded monthly?
I got 4.98% can someone varify?

b) How long will it take 22 000 to grow to 32224 dollars if the investment eats interest at the rate of 7.5% monthly?

______ years?

I do not get the same answer as you for this compound interest problem:
$B=P(1+\frac{r}{n})^{nt}$
$32750=22000(1+\frac{r}{12})^{12*7}$
$1.4886364=(1+\frac{r}{12})^{84}$
$1.0047477=1+\frac{r}{12}$
$0.0047477=\frac{r}{12}$
$0.0569720=r$
So I get a 5.7% interest rate.

For the second part of this problem, use the same formula.