Posted by Kim on .
If jim wants to accumulatw $13,217.74 in 2 years. currently has $10,477.03 to invest. what interest rate must he earn on the investment if he deposits $10,477.03 today to have $13,217.74 exactly 2 years from today?
I like this question :-)
Let's assume interest is compounded annually.
After one year, the value will be 10,477.03 * x, where x is 1 + (interest rate implicitly divided by 100).
After two years, it will be
10,477.03 * x * x, because we increase it by the same percent again. And we want that to be 13,217.74
10477.03 * x * x = 13217.74
x^2 = 13217.74/10477.03
and your calculator will take it from there.