Question

Please see attachment for question . I have added an example for reference

Answer 1

Hello

To solve this problem, we would use the formula of future value of an entity

`\begin{gathered} fv=pv(1+r)^t \\ fv=\text{future value} \\ pv=\text{present value} \\ r=\text{rate} \\ t=\text{time} \end{gathered}`

So, we can proceed to identify and define our equation

`\begin{gathered} pv=8,250 \\ fv=44,000 \\ t=20 \end{gathered}`

Let's substitute and solve for r

`\begin{gathered} 44000=8250(1+r)^(20) \\ (44000)/(8250)=(1+r)^(20) \\ 5.3=(1+r)^(20) \\ \sqrt[20]{5.3}=1+r \\ r=\sqrt[20]{5.3}-1 \\ r=1.0869-1 \\ r=0.0869 \\ r=0.0869*100 \\ r\approx8.7\text{ \%} \end{gathered}`

From the calculation above, the rate is approximately equal to 8.7%