Problema Solution
a gift of $6000 was given to a city grew to be $4,000,000 in 200 years. At what interest rate compounded annually would this growth occur?
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P = $6,000 is the principal
A = $4,000,000.00 is the future value after 200 years
t = 200 years is the time in years
m = 1 is the number of compounding periods per year
n = m*t = 200*1 = 200 is the number of compounding periods
r= is the annual interest rate as a decimal
A = P(1 + r)^n
4,000,000 = 6,000(1 + r)^200
6,000(1 + r)^200 = 4,000,000
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r = 0.033 or 3.3%
This growth will occur when the interest rate is 3.3%.