The future value of $7000 invested for 5 years at rate r, compounded annually, is given by $S = 7000 ( 1 + r ) ^ { 5 }$ Find the rate r, as a percent, that gives a future value of $9817.86. Round to the nearest whole percent.

Question

Quizplus · Accepted Answer

To find the rate r, solve the equation $9817.86 = 7000 (1 + r)^5$. Dividing both sides by 7000 gives $1.40255 = (1 + r)^5$. Taking the fifth root gives $1 + r = 1.07$, so $r = 0.07$ or 7%.

The Future Value of $7000 Invested for 5 Years at Rate