Results 1 to 8 of 8

Math Help - Annual Rate

  1. #1
    Junior Member
    Joined
    Oct 2008
    Posts
    68

    Annual Rate

    What annual rate of interest compounded annually should you seek if you want to double your investment in 5 years?
    Follow Math Help Forum on Facebook and Google+

  2. #2
    is up to his old tricks again! Jhevon's Avatar
    Joined
    Feb 2007
    From
    New York, USA
    Posts
    11,663
    Thanks
    3
    Quote Originally Posted by dc52789 View Post
    What annual rate of interest compounded annually should you seek if you want to double your investment in 5 years?
    use the compound interest formula:

    A = P \left( 1 + \frac rn \right)^{nt}

    where A is the amount after time t, P is the principal, r is the rate of interest, and n is the number of times in is compounded per year


    here, n = 1 and you need to find r. but this is what you want to happen. after 5 years, you want P to become 2P. thus you want

    2P = P \left( 1 + r \right)^5

    now solve for r
    Follow Math Help Forum on Facebook and Google+

  3. #3
    Junior Member
    Joined
    Oct 2008
    Posts
    68
    Quote Originally Posted by Jhevon View Post
    use the compound interest formula:

    A = P \left( 1 + \frac rn \right)^{nt}

    where A is the amount after time t, P is the principal, r is the rate of interest, and n is the number of times in is compounded per year


    here, n = 1 and you need to find r. but this is what you want to happen. after 5 years, you want P to become 2P. thus you want

    2P = P \left( 1 + r \right)^5

    now solve for r
    I did 2 = (1+r)^5
    Is that right so far?
    Follow Math Help Forum on Facebook and Google+

  4. #4
    is up to his old tricks again! Jhevon's Avatar
    Joined
    Feb 2007
    From
    New York, USA
    Posts
    11,663
    Thanks
    3
    Quote Originally Posted by dc52789 View Post
    I did 2 = (1+r)^5
    Is that right so far?
    yes

    P is not zero, so we can divide by it
    Follow Math Help Forum on Facebook and Google+

  5. #5
    Junior Member
    Joined
    Oct 2008
    Posts
    68
    Quote Originally Posted by Jhevon View Post
    yes

    P is not zero, so we can divide by it
    So...do I put the square 5 on the two to eliminate the 5 on the other side?
    Follow Math Help Forum on Facebook and Google+

  6. #6
    is up to his old tricks again! Jhevon's Avatar
    Joined
    Feb 2007
    From
    New York, USA
    Posts
    11,663
    Thanks
    3
    Quote Originally Posted by dc52789 View Post
    So...do I put the square 5 on the two to eliminate the 5 on the other side?
    take the 5th root of both sides and continue
    Follow Math Help Forum on Facebook and Google+

  7. #7
    Junior Member
    Joined
    Oct 2008
    Posts
    68
    Quote Originally Posted by Jhevon View Post
    take the 5th root of both sides and continue
    is it 0.149 => 15%?
    Follow Math Help Forum on Facebook and Google+

  8. #8
    is up to his old tricks again! Jhevon's Avatar
    Joined
    Feb 2007
    From
    New York, USA
    Posts
    11,663
    Thanks
    3
    Quote Originally Posted by dc52789 View Post
    is it 0.149 => 15%?
    yeah, around 14.9%
    Follow Math Help Forum on Facebook and Google+

Similar Math Help Forum Discussions

  1. annual rate of interest
    Posted in the Business Math Forum
    Replies: 1
    Last Post: February 11th 2011, 12:05 AM
  2. annual proportionate growth rate
    Posted in the Differential Equations Forum
    Replies: 0
    Last Post: May 5th 2009, 11:04 AM
  3. Find the Annual Rate
    Posted in the Pre-Calculus Forum
    Replies: 4
    Last Post: August 13th 2008, 05:26 AM
  4. Nominal Annual Rate
    Posted in the Math Topics Forum
    Replies: 0
    Last Post: November 18th 2007, 09:58 AM
  5. annual rate of return
    Posted in the Business Math Forum
    Replies: 2
    Last Post: September 16th 2005, 12:06 PM

Search Tags


/mathhelpforum @mathhelpforum