Suppose an investment offers to triple your money in 36 months (don’t believe it). What rate of return per quarter are you being offered
To find the rate of return per quarter, we can use the formula for compound interest:
Future Value (FV) = Present Value (PV) x (1 + r)^n
Where:
FV = triple the present value of the investment
PV = present value of the investment
r = rate of return per quarter
n = number of quarters (36 months = 12 quarters)
Since the investment offers to triple the money, FV = 3 x PV.
So our equation becomes:
3 x PV = PV x (1 + r)^12
Now, let's solve for r:
Divide both sides of the equation by PV:
3 = (1 + r)^12
Take the 12th root of both sides of the equation:
(1 + r) = 3^(1/12)
Subtract 1 from both sides of the equation:
r = 3^(1/12) - 1
Calculating the value of r, we get:
r ≈ 0.09466
Therefore, you are being offered an approximate rate of return per quarter of 9.466%.
To determine the rate of return per quarter for an investment that offers to triple your money in 36 months, you can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal amount (initial investment)
r = the annual interest rate (as a decimal)
n = the number of compounding periods per year
t = the number of years
In this case, we want to find the rate of return per quarter, so we need to convert 36 months into years (which is 3 years) and set n as 4 (since there are four quarters in a year).
Let's assume an initial investment of $1:
3 = 1(1 + r/4)^(4*3)
Now, we can solve for r:
3 = (1 + r/4)^12
Taking the 12th root of both sides:
1.09315 = 1 + r/4
Subtracting 1 from both sides:
0.09315 = r/4
Multiplying both sides by 4:
r = 0.3726
Therefore, the rate of return per quarter being offered is approximately 37.26%.
let the quarterly rate be i
then
1(1+i)^12 = 3
(1+i) = 3^(3/12) = 3^(1/4) = 1.316
i = .316
or
appr 31.6 % per quarter, or appr 126.4% per annum
quickly, tell me who is giving us that, I have a few dollars to invest.