Question

An amount was invested at

r%

per quarter. What value of

r

will ensure that accumulated

amount at the end of one year is 1.5 times more than amount invested? Correct to 2 decimal

places​

Answer 1

10.67% per quarter

42.68% per year

Explanation:

The value of r that would be ensure the initial amount gives 1.5 times future value in in one year can be computed using rate formula in excel as below:

=rate(nper,pmt,-pv,fv)

nper is 1 year multiplied 4 quarters=4

pmt is the amount invested periodically and it is zero

Assume that $1000 was invested

FV which is the future value=1.5*$1000=$1,500

PV=$1000

=rate(4,0,-1000,1500)

rate=10.67%

rate per year=10.67% *4