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If $240,000 is invested today and returns $432,000 in 10 years, what formula can be used to calculate the interest rate
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13 votes
13 votes
If $240,000 is invested today and returns $432,000 in 10 years, what formula can be used to calculate the interest rate

User Kolmar
by
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1 Answer

29 votes
29 votes

Answer:

r = (FV/PV)^(1/n) – 1

and

Interest is 6.05 %

Step-by-step explanation:

Interest is calculated as :

r = (FV/PV)^(1/n) – 1

Thus,

The formula that can be used to calculate the interest rate is

r = ($432,000/$240,000)^(1/10) – 1

= 6.05 %

User Alag
by
2.6k points
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