Calculating Interest Rates

newee · #1 Mar 3, 2008, 10:54 AM

What is the formula for calculating interest rates when the present value, the years and the future value is given?

ebaines · Mar 3, 2008, 11:13 AM

Remember this formula:

$<br /> FV = PV(1+i)^n<br />$

where:
FV = future value
PV = present value
i = interest rate per period (typically years)
n = period (typicaly years).

In this case you need to rearrange the formula to get $i$ by itself:

$<br /> i = $ \frac {FV} {PV} $ ^ {1/n} -1<br />$

Hope this helps.



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