Compound interest, how to find rate?

Algebra
Tutor: None Selected Time limit: 1 Day

If you invest $10,000 and 18 years later your compound interest with the principal is now $25,000. What was the interest rate?

Jun 14th, 2015

Thank you for the opportunity to help you with your question!

compound interest is calculated using the formula A=C(1+i)^n where A is the amount at the end of the investment period, C is the principal amount, n the number of years and i is the interest rate compounded annually.

in this case, A=25,000

C=10,000

i=?

n=18years

substituting the values in the formula,

25,000=10,000(1+i)^18

divide both sides by 10,000

2.5= (1+i)^18

Getting the eighteenth root of both sides, we get,

18√2.5=18√(1+i)^18

1.05222297=(1+i)

Subtract 1 from both sides,

1.05222297-1=1+i-1

0.05222297=i

Multiply by 100%

I=5.22%


Please let me know if you need any clarification. I'm always happy to answer your questions.
Jun 14th, 2015

I used C(1+i)^n or P(1+r)^x to check and it works! Thank you so much for breaking the process down. Great work!

Jun 14th, 2015

yeah anytime

Jun 14th, 2015

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