What interest rate (the nearest percent) must Charlie earn on a $75,000 investment today so that he will have $190,000 after 12 years?

Question

Quizplus · Accepted Answer

This can be solved using the formula FV = PV * (1+r)^n, where FV is the future value, PV is the present value, r is the interest rate, and n is the number of years. Plugging in the given values, we get:

190,000 = 75,000 * (1+r)^12

Dividing both sides by 75,000 gives:

2.53333 = (1+r)^12

Taking the 12th root of both sides gives:

1.0797 = 1+r

Subtracting 1 from both sides gives:

r = 0.0797 or 7.97%

The nearest percent is 8%, so the answer is C, 8%.

What Interest Rate (The Nearest Percent) Must Charlie Earn on a $75,000