The solution to this problem requires time value of money calculations. Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. If Shidan has $5,000 to invest and wants to have $10,000 at the end of 9 years, what compounded interest rate must she get on her money assume annual compounding?
A) 5%
B) 7%
C) 8%
D) 6%

Question

Quizplus · Accepted Answer

To find the required interest rate, we use the future value formula: FV = PV * (1 + r)^n. Here, FV = $10,000, PV = $5,000, and n = 9 years. Solving for r gives approximately 8%.

The Solution to This Problem Requires Time Value of Money