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Chapter 6: Question 3BE (page 302)

Candice Willis will invest \(30,000 today. She needs \)150,000 in 21 years. What annual interest rate must she earn?

Short Answer

Expert verified

The annual interest rate that she must earn is 5%.

Step by step solution

01

Definition of annual interest rate

Annual Interest Rate is defined as the amount charged by the lender annually from the borrower for using the money.

02

Computation of annual interest rate

FV=PV(FVFn,i)150,000=30,000X5=X

By using the present value table, Interest rate = 5% approximately

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