Question

g Cindy Houston has a $27,600 debt that she wishes to repay 4 years from today; she has $19,553 that she intends to invest for the 4 years. What rate of interest will she need to earn annually in order to accumulate enough to pay the debt

Answer 1

Answer:

9%

Explanation:

Data provided in the question

Future value = $27,600

Present value = $19,533

Time period = 4 years

So the rate of interest is

Future value = Present value × (1 + interest rate)^number of years

$27,600 = $19,533 × (1 + interest rate)^4 years

$27,600 ÷ $19,533 =  (1 + interest rate)^4 years

$ 1.411548   =  (1 + interest rate)^4 years

After solving this

So, the interest rate is 9%