Question

Bill Padley expects to invest $10,000 for 25 years, after which he wants to receive $108,347. What rate of interest must Padley earn

Answer 1

10%

Step-by-step explanation:

r = (FV / PV) ^n -1

r = interest rate

FV = Future value = $108,347

PV = present value = $10,000

n = number of years = 25

($108,347/$10,000)^0.04 - 1 = 0.10 = 10%