Noha is investing $2517 in an account compounded monthly. She wants to have $3000 in 3 years for a trip to Europe. What interest rate, to the nearest hundredth of a percent, compounded monthly, does she need?
2007-01-17 10:01:42 · 3 answers · asked by untilyoucamealong04 3 in Science & Mathematics ➔ Mathematics
A = Ao(1+r/12)^36 (for 3 years)
so (A/Ao)^(1/36) = 1 + r/12
((A/Ao)^(1/36) - 1)*12 = r
((3000/2517)^(1/36) - 1) * 12 = r
r = 5.866%
2007-01-17 10:22:18 · answer #1 · answered by Modus Operandi 6 · 2⤊ 0⤋
3 years= 36 months
2517 x (1+k)^36 = 3000
(1+k)^36= 1.19189511
log(1+k)^36= log 1.19189511
36log (1+k)= (as above)
interest rate compounded monthly is.. 0.5%
I'm not sure, i could be slightly out of wack with my maths for finance, haven't done it in quite some time!
2007-01-17 18:30:09 · answer #2 · answered by smiler333 2 · 0⤊ 0⤋
FYI, Dead Inside has it right. Chaney forgot to multiply the 12 months in the power by 3 (for years).
2007-01-17 18:53:42 · answer #3 · answered by leblongeezer 5 · 0⤊ 0⤋