What interest rate is required to accumulate $6,802.50 in four years from an investment of $5,000?
A)5%
B)8%
C)10%
D)12%
E)15%

Question

Quizplus · Accepted Answer

Present Value = Future Value * Interest Factor
$5,000 = $6,802.50 * Interest Factor; Interest Factor = 0.7350
0.7350 is the interest factor on the Present Value table; n = 4; i = 8%
Or, Alternative Solution: Future Value = Present Value * Interest Factor
$6,802.50 = $5,000 * Interest Factor; Interest Factor = 1.3605
1.3605 is the interest factor on the Future Value table; n = 4; i = 8%

What Interest Rate Is Required to Accumulate $6,802