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2 November, 00:03

Solve for the unknown interest rate in each of the following (Do not round intermediate calculations and round your final answers to 2 decimal places. (e. g., 32.16)):

Present Value Years Interest Rate Future Value

$ 330 4 % $ 422

450 18 1,571

48,000 19 266,917

47,261 25 803,425

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Answers (1)
  1. 2 November, 02:00
    0
    6.34%

    7.19%

    9.45%

    12.00%

    Explanation:

    FV = PV * (1+rate) ^tenor

    -> Rate = (FV/PV) ^ (1/tenor) - 1

    PV: $330; tenor: 4 year; FV: $422

    -> Rate = (422/330) ^ (1/4) - 1 = 6.34%

    PV: $450; tenor: 18 year; FV: $1,571

    -> Rate = (1571/450) ^ (1/18) - 1 = 7.19%

    PV: $48,000; tenor: 19 year; FV: $266,917

    -> Rate = (266917/48000) ^ (1/19) - 1 = 9.45%

    PV: $47,261; tenor: 25 years; FV: $803,425

    -> Rate = (803425/47261) ^ (1/25) - 1 = 12.00%
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