Question

A construction company makes annual deposits of $400,000 into an investment for 25 years. If the firm must have $17 million by the end of the 25th year, what annual interest rate must the investment earn

Answer 1

Answer:

4.15%

Explanation:

In this question we use the RATE formula that is shown in the attachment below:

Given that,  

Present value = $0

Future value or Face value = $17,000,000

PMT = $400,000

NPER = 25 years

The formula is shown below:  

= Rate(NPER;PMT;PV;-FV;type)  

The future value come in negative  

So, after solving this, the annual interest rate is 4.15%