Finance
posted by Antoinette on .
Calculating Interest Rate. Find the interest rate implied by the following combinations of present and future values.
PresentValue Years Future Value
$400 11 $684
$183 4 $249
$300 7 $300
Since you do not state otherwise, I am assuming that your interest rate is compounded annually.
I will do the second of your questions.
Using Amount = Present Value(1+i)^n
we do not know i.
249=183(1+i)^4
1.3606557=(1+i)^4
take the fourth root
1.0800331=1+i
giving you i=0.0080031
so the annual rate is 8%
by observation the rate for you last question is clearly 0%

460 present 11 years 968 future value