Solve the problem.
-Find the interest rate necessary for a present value of $18,401 to grow to a future value of $21,559.70 if interest is compounded quarterly for two years.
A) 10%
B) 12%
C) 6%
D) 8%

Question

Quizplus · Accepted Answer

The formula for compound interest is $ FV = PV \times (1 + \frac{r}{n})^{nt} $. Plugging in the values: $ 21,559.70 = 18,401 \times (1 + \frac{r}{4})^{8} $. Solving for $ r $ gives approximately 8%.

Solve the Problem. -Find the Interest Rate Necessary for a Present Value of Present