Question

You currently have $7,500 to invest. You can invest the full amount now for a periodof 9 years at which time you want to have $15,000. Approximately what rate ofreturn is needed to accomplish this investment goal?

Answer 1

Pt = Po + Po*rt,
Pt = Po(1+rt),
7500(1+9r) = 15,000.
Divide both sides by 7500:
1 + 9r = 2,
9r = 2 - 1 = 1.
r = 1 / 9 = 0.111 = 11.111%.

Answer 2

678