how do u find the interest rate when you have a fv 502.84, pv 250 and number of years 5. When the equation fv=pv(1+k)^n, where k is the interest
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how do u find the interest rate when you have a fv 502.84, pv 250 and number of years 5. When the equation fv=pv(1+k)^n, where k is the interest
FV = PV(1+K)^n
I will take ln or natural log in both sides of the equation
ln(FV) = ln(PV) + ln(1+K)^n
ln(FV) = ln(PV) + n*ln(1+K)
then I move n from the left hand side to the right hand side
(ln(FV)-ln(PV))/n = ln(1+K)
If you have calculator, you can find the value of (ln(FV)-ln(PV))/n, I will suppose that this term is X,next
X = ln(1+K)
I take e (exponential) to eliminate the ln, I will get
e^X = 1+K
(e^X) - 1 = K
Therefore, I get tha answer that K = (e^X) - 1
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