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    braiduizum's Avatar
    braiduizum Posts: 3, Reputation: 1
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    #1

    Feb 11, 2008, 08:21 AM
    How do you calculate interest rates ?
    How do I find out the interest rate of a problem if the present value is @265 the durations of time is two years and the future value is $307.
    braiduizum's Avatar
    braiduizum Posts: 3, Reputation: 1
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    #2

    Feb 11, 2008, 08:25 AM
    How do I slove for the interest rate when the present value is $265 the number of years is two and the future value is $307.
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    braiduizum Posts: 3, Reputation: 1
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    #3

    Feb 11, 2008, 08:31 AM
    FV = PV(1+r)t-1

    (307/265)2-1=10%
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #4

    Feb 11, 2008, 11:47 PM
    Not sure where you got that equation.

    The problem doesn't mention compounding which tells me it's simple interest, which is:

    FV = PV (1 + rt)

    If it were compounded, it would first have to say how often it compounds. If we assume it compounds annually, it would be:

    307 = 265 (1 + r) ^ 2

    meaning you're getting into solving for things using radicals and the answer would still not be too far off from using the simple interest equation. (i.e. it's not 10% either way)

    Try the simple interest equation and see what you come up with.
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