Exercise 610 Consider the following independent situations C

Exercise 6-10

Consider the following independent situations.

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Exercise 6-10

Consider the following independent situations.

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1.We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

950,000=142673(1.09)^n

(950,000/142673)=(1.09)^n

Taking log on both sides;

log(950,000/142673)=n*log 1.09

n=log(950,000/142673)/log 1.09

=22 years(Approx).

950000=217716(1+r/100)^13

(950000/217716)=(1+r/100)^13

(1+r/100)=(950000/217716)^(1/13)

(1+r/100)=1.12

r=(1.12-1)*100

=12%