Question

You are hoping to have $10,000 in your account 7 years from today in order to go on a reindeer expedition in Lapland. If your current balance is $6,000, what APR (compounded monthly) would be required if you are to have $10,000 in your account in 7 years?

Answer 1

APR= 7.32%

Step-by-step explanation:

The APR is computed as shown below:

Future value = Present value (1 + r/ m)^nm

Future value = 10,000

Present value= 6,000

n=7

m=12

$ 10,000 = $ 6,000 (1 + r / 12 )^12 x 7

$ 10,000 = $ 6,000 (1 + r / 12 )^84

($ 10,000 / $ 6,000)^ 1 / 84 - 1 = r / 12

1.006099786 - 1 = r / 12

0.006099786 x 12 = r

r=0.006099786 x 12

r = 7.32%

APR= 7.32%