What is the interest rate on a three-year investment with a future value of $1000 and a present value of $863.84?

asked Feb 8, 2019 85.3k views

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6 votes

Use

Substituting
F=1000, P=863.84, n=3
solve for i

1000=863.84^(1+i)^3

solving for i
=>

$i=((1000)/(863.84))^{(1)/(3)}-1$
=0.0500

Answer: the annual interest rate is 5%

Detly answered Feb 14, 2019

by Detly

8.8k points

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