Question

What is the interest rate on a three-year investment with a future value of $1000 and a present value of $863.84?

Answer 1

Use
$F=P(1+i)^n$

Substituting 
F=1000, P=863.84, n=3
solve for i
$1000=863.84^(1+i)^3$
solving for i 
=> 
$i=(\frac{1000}{863.84})^{\frac{1}{3}}-1$
=0.0500

Answer: the annual interest rate is 5%