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Math

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If the principal P = $900, the interest I = $882, and time t = 7 years. What is the rate? What is the future value?

  • Math - ,

    I will assume "simple interest", even though for 7 yrs that is very unusual

    Rate = Interest/(prinicipal x time)
    = 882/(900(7))
    =.14
    or 14%

    check: I = PRT = 900(.14)(7) = 882

    if it is compound interest ....
    1782 = 900(1+i)^7
    1.98 = (1+i)^7
    take 7th root
    1.102525 = 1+i
    i = .102525

    the annual rate would be 10.25%

    this shows the tremendous difference between simple and compound interest over a significant time

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