If you can invest $ 800 now and receive $ 1,000 at the end of 4 years, what rate of interest will you earn on this investment?
2006-10-24 00:21:37 · 7 answers · asked by Tim H 1 in Science & Mathematics ➔ Mathematics
You use the word "invest", that determines a nomenclature that is common, traditional and/or regulatory. So interest on investments is expressed as APY (annual percentage yield). Any institution paying interest, that comes under the purview of the US government, is required to state the actual APY. This removes the confusion of a various base rates, compounding periods, and length of terms.
You also placed a $ in front of you numbers. This would indicate that you are talking dollars and cents. So your Fv (future value) must be really be $1000.00 but less than $1000.01 (interest payers do not round up).
With this all in mind, your APY would be:
5.7371264%
2006-10-24 01:21:38 · answer #1 · answered by veritas 5 · 1⤊ 1⤋
800 x (y)^4 =1,000
then y=1.057
1.057-1=.057
multiply by 100 you get 5.7%
it is the formula for
capital x (1+interest rate)^years = money at the end
2006-10-24 00:38:00 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Are you doing simple or compound interest? If simple, you made $200 in 4 years from $800, so the interest is ($200)/(4*$800)=.0625, or 6.25%.
If you are doing compound interest, it depends a bit on how often the interest is compounded. The posters above assumed yearly compounding. If the compounding was continous, then you would solve
1000=800*exp(r*4),
so
r=(1/4)ln(10000/800)=
.05578=5.58%
2006-10-24 01:27:53 · answer #3 · answered by mathematician 7 · 1⤊ 2⤋
I call that a bad investment..... do no longer try this......you need to with the help of a CD, or a inventory which provides you with a greater efficient renturn in in basic terms one year... do some greater examine and help your self... solid luck
2016-10-02 21:49:37 · answer #4 · answered by gangwer 4 · 0⤊ 0⤋
Principal = 800
Amount = 1000
Time = 4 years
Interest = 1000-800 = 200
Rate=?
Assuming that it is Simple Interest you mentioned
Interest = [(Principal)(Rate)(Time)]/100
200 = [(800)(R)(4)]/100
200 = 3200R/100
200 = 32R
32R = 200
R = 200/32
= 25/4
= 6.25%
The rate of interest is 6.25%
2006-10-24 01:15:02 · answer #5 · answered by Akilesh - Internet Undertaker 7 · 0⤊ 2⤋
Define v=1/(1+i)
800=(1000)*(v^4)
v^4=.8
v=.8^(1/4)=.945742
1/(1+i)=.945742
(1/.945742)-1=i
i = 0.057 rounded
2006-10-24 01:03:53 · answer #6 · answered by fcas80 7 · 0⤊ 2⤋
5.75% per year compounded annually... actually my best estimate, you would end up with 1,000.49 at the end of 4 years at this rate....
2006-10-24 00:40:01 · answer #7 · answered by Andy FF1,2,CrTr,4,5,6,7,8,9,10 5 · 0⤊ 0⤋