how do I determine the compounding rate required to turn $350 into $14,000
over 30 years?
Thank you
It requires the solution for R of the following equation,
A=PR^n
where
A=future value = $14000
P=present value = $350
n=number of periods = 30 and
R=rate of interest
So, we need to solve for R
14000=350R^n
take logs
log(14000/350)=30log(R)
log(R)=log(40)/30=.053402
R=1.1308
Therefore the interest rate required is
r=13.08% p.a.