Question
) An investment of $37,000 was deposited in the bank. Interest was computed on a semiannual basis and was kept there for 10 years. If the maturity value of this investment is $74,000, at what interest rate was it invested?
Answers
Damon
20 periods
every period amount is multiplied by (1+r)
where r = half the percent rate/100
74,000 = 37,000 (1+r)^20
2 = (1+r)^20
log 2 = 20 log(1+r)
log(1+r) = .01505
1+r = 10^.01505 = 1.03526
r = .035
2r = .07 or 7%
every period amount is multiplied by (1+r)
where r = half the percent rate/100
74,000 = 37,000 (1+r)^20
2 = (1+r)^20
log 2 = 20 log(1+r)
log(1+r) = .01505
1+r = 10^.01505 = 1.03526
r = .035
2r = .07 or 7%