Asked by Brittany
A stuffed animal dealer tells you that a fish he bought for $8 four years ago is now worth $200 follow the steps below to find the effective yield for this investment.
Begin with the equation 8(1+r) ^4=200.Solve for (1+r) ^4
Take the common logarithm of each side of the equation.
Use the power property of Logarithms to rewrite log (1+r) ^4
Solve the equation for log (1+r)
Use exponential logarithmic inverse property to eliminate the logarithm
(Hint: Remember that these are common logarithms) Then solve for R.
If the current trend continues, how much will a $1000 investment in stuffed fish be worth in 3 years?
Under these conditions how long will it be before you can buy your computer? Explain how you found your answer.
Begin with the equation 8(1+r) ^4=200.Solve for (1+r) ^4
Take the common logarithm of each side of the equation.
Use the power property of Logarithms to rewrite log (1+r) ^4
Solve the equation for log (1+r)
Use exponential logarithmic inverse property to eliminate the logarithm
(Hint: Remember that these are common logarithms) Then solve for R.
If the current trend continues, how much will a $1000 investment in stuffed fish be worth in 3 years?
Under these conditions how long will it be before you can buy your computer? Explain how you found your answer.
Answers
Answered by
Reiny
You don't even need logs to do that question. From...
8(1+r) ^4=200
(1+r)^4 = 25
take the fourth root, (take the square root twice in a row) to get
1 + r = 2.236058
r = 1.236
the rate of return is 123.6% (wow)
so $1000 invested at that rate for 3 years would have a value of
1000(2.236)^3
= $11,180.34
8(1+r) ^4=200
(1+r)^4 = 25
take the fourth root, (take the square root twice in a row) to get
1 + r = 2.236058
r = 1.236
the rate of return is 123.6% (wow)
so $1000 invested at that rate for 3 years would have a value of
1000(2.236)^3
= $11,180.34