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Question

Connect M MLK Holiday-jwilson14 × L Recent . Google Drive × Untitled document . Go x e Chegg Study | Guided Sc , C0 https://newconnect.mheducation.com/flow/connect.html Apps D PowerTeacherMisc D AP GovernmentSt co D Work l Schedule Access Gmail % Mustang Public Schc D MACU Music e Final Cut Pro X102E D ASOIAF Human Geo #general 99 Talk Simple Team C D Library Chapter 4 Problems Help Save & Exit Submit Saved Check my work 2 Solve for the unknown interest rate in each of the following: (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) 10 Present Value Years Interest Rate Future Value $ 200 320 35,000 34,261 $232 points 847 17 18 20 143,410 261,665 eBook Hint Print References Mc Graw Hill Prev 2 of 6 Next > Education

Explanation / Answer

FV = PV (1 + r)^n

Where,

Maturity value (FV) = $232

Present value (PV) = $200

Time (n) = 31.050718 = (1 + i)

Let’s put all the values in the formula to solve for interest rate (i)

232 = 200 (1 + i) ^3

232/ 200 = (1 + i) ^3

1.16 = (1 + i) ^3

31.16 = (1 + i)                                                  {Taking 3th root of 1.16}

1.050718 = (1 + i)

i = 1.050718 - 1

i = 0.05072

So interest rate is 0.0507 or 5.07%

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Let's put all the values in the formula to solve for interest rate (i)

847 = 320 (1 + i) ^17

847/ 320 = (1 + i) ^17

2.6469 = (1 + i) ^17

172.6469 = (1 + i)                                                  {Taking 17th root of 2.6469}

1.058929 = (1 + i)

i = 1.058929 - 1

i = 0.05893

So interest rate is 0.0589 or 5.89%

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Let's put all the values in the formula to solve for interest rate (i)

143410 = 35000 (1 + i) ^18

143410/ 35000 = (1 + i) ^18

4.0974 = (1 + i) ^18

184.0974 = (1 + i)                                                  {Taking 18th root of 4.0974}

1.081504 = (1 + i)

i = 1.081504 - 1

i = 0.0815

So interest rate is 0.0815 or 8.15%

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Let's put all the values in the formula to solve for interest rate (i)

261665 = 34261 (1 + i) ^20

261665/ 34261 = (1 + i) ^20

7.6374 = (1 + i) ^20

207.6374 = (1 + i)                                                  {Taking 20th root of 7.6374}

1.106999 = (1 + i)

i = 1.106999 - 1

i = 0.107

So interest rate is 0.107 or 10.7%

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Hope that helps.

Feel free to comment if you need further assistance J

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