how do you take the fourth root? Please refer to the example below?
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%
To take the fourth root of a number, you can use a calculator or a computer software program that has a built-in function for calculating roots. Here's how you can do it step by step:
Step 1: Start with the equation 1.3606557 = (1 + i)^4.
Step 2: To isolate (1 + i), you need to take the fourth root of both sides of the equation.
Step 3: Use a calculator or a computer software program that has a built-in function for taking roots. Enter 1.3606557 and find the fourth root. In this case, the fourth root of 1.3606557 is approximately 1.0800331.
Step 4: Rewrite the equation as 1.0800331 = 1 + i.
Step 5: To isolate i, subtract 1 from both sides of the equation.
1.0800331 - 1 = 1 + i - 1,
0.0800331 = i.
Step 6: So, the value of i is approximately 0.0800331 or 8.00331%.
Therefore, the annual rate in this example is 8%.