What interest rate (the nearest percent) must Charlie earn on a €300,000 investment today so that he will have €760,000 after 12 years?
A) 6%
B) 7%
C) 8%
D) 9%

Question

Quizplus · Accepted Answer

We can use the formula: 
Future Value = Present Value x (1 + r)^n 
where r is the interest rate, n is the number of years, and we need to solve for r. 
Plugging in the given values, we get: 
760,000 = 300,000 x (1 + r)^12 
Simplifying, we get: 
(1 + r)^12 = 760,000 / 300,000 
(1 + r)^12 = 2.53333 
Taking the twelfth root and subtracting 1, we get: 
r = 0.08 or 8% 
Therefore, Charlie must earn an interest rate of 8% to reach his goal.

What Interest Rate (The Nearest Percent) Must Charlie Earn on a €300,000