Question

If you had $35,000 that you wanted to grow to $150,000 in 30 years in an investment that was compounded monthly, what interest rate would it have to pay for your investment to grow to $150,000 in 30 years? (nearest hundredth percent)

Answer 1

Explanation:

FV = PV (1+i)^n

n = 30 years * 12 month periods = 360 periods

decimal interest per period = i / 12

150 000 = 35000(1+ i/12)^360

150/35 = (1+i/12)^360 take 360th root of both sides

1+i/12 = 1.00405

i = 4.86%