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josephfrankel
Jun 26, 2007, 10:15 AM
If an investment is up 88% over 6 years (simple interest) what is the compound rate of growth per anum.

My question was not for the purposes of homework.. I need the number for a real world reason. Unfortunately, I am very bad in math and could never figure out how to do this formula

ebaines
Jun 26, 2007, 10:22 AM
The formula for simple compound interest is:

Future\ Value = Initial\ Value (1+i) ^N

Where i is the interest rate per year and N is the number of years.
Here you know that "Future Value" is 1.88 times the initial value, and N is 6 years. Can you now determine the value for i? It's easiest to solve this using logarithms.

raaj
Aug 25, 2007, 03:41 AM
What is the formula of compound interest