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1 November, 23:02

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

Present Value Years Interest Rate Future Value

$770 5 % $ 1,491

960 6 1,828

20,500 17 147,332

75,800 20 323,815

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Answers (1)
  1. 1 November, 23:25
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    Answer and Explanation:

    For computing the unknown interest we need to apply the RATE formula which is shown below:

    For case 1

    Given that

    Present value = $770

    Future value or Face value = $1,491

    PMT = $0

    NPER = 5 years

    The formula is shown below:

    = Rate (NPER; PMT; -PV; FV; type)

    The present value come in negative

    So, after applying the above formula, the interest rate is 14.13%

    For case 2

    Given that

    Present value = $960

    Future value or Face value = $1,828

    PMT = $0

    NPER = 6 years

    The formula is shown below:

    = Rate (NPER; PMT; -PV; FV; type)

    The present value come in negative

    So, after applying the above formula, the interest rate is 11.33%

    For case 3

    Given that

    Present value = $20,500

    Future value or Face value = $147,332

    PMT = $0

    NPER = 17 years

    The formula is shown below:

    = Rate (NPER; PMT; -PV; FV; type)

    The present value come in negative

    So, after applying the above formula, the interest rate is 12.30%

    For case 4

    Given that

    Present value = $75,800

    Future value or Face value = $323,815

    PMT = $0

    NPER = 20 years

    The formula is shown below:

    = Rate (NPER; PMT; -PV; FV; type)

    The present value come in negative

    So, after applying the above formula, the interest rate is 7.53%
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