Phillippe invested $1,000 10 years ago and expected to have $1,800 today. He has not added or withdrawn any money from this account since his initial investment. All interest was reinvested in the account. As it turns out, he only has $1,680 in his account today. Which one of the following must be true?

Question

Brooklyn

Business

8 April, 16:42

Phillippe invested $1,000 10 years ago and expected to have $1,800 today. He has not added or withdrawn any money from this account since his initial investment. All interest was reinvested in the account. As it turns out, he only has $1,680 in his account today. Which one of the following must be true?

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Answers (1)

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Chandler Reeves · Answer 1

He earned a lower interest rate than he expected

Option 1800 interest rate 6,06% expected

Option 1680 interest rate 5,33% real amount

Explanation:

Option 1680 interest rate 5,33%

1 1.000 5,33% 53 1.053

2 1.053 5,33% 56 1.109

3 1.109 5,33% 59 1.169

4 1.169 5,33% 62 1.231

5 1.231 5,33% 66 1.296

6 1.296 5,33% 69 1.366

7 1.366 5,33% 73 1.438

8 1.438 5,33% 77 1.515

9 1.515 5,33% 81 1.596

10 1.596 5,33% 85 1.681

Option 1800 interest rate 6,06%

1 1.000 6,06% 61 1.061

2 1.061 6,06% 64 1.125

3 1.125 6,06% 68 1.193

4 1.193 6,06% 72 1.265

5 1.265 6,06% 77 1.342

6 1.342 6,06% 81 1.423

7 1.423 6,06% 86 1.510

8 1.510 6,06% 91 1.601

9 1.601 6,06% 97 1.698

10 1.698 6,06% 103 1.801