5. If you have an initial investment of $5,500 that you would like to grow to $12,000 over the next 7 years, then what interest rate do you need to achieve this goal assuming annual compounding? Show your work (at least the problem set up before entering numbers into calculator)

5. If you have an initial investment of $5,500 that you would like to grow to $12,000 over the next 7 years, then what interest rate do you need to achieve this goal assuming annual compounding? Show your work (at least the problem set up before entering numbers into calculator)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3PB: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

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5. If you have an initial investment of $5,500 that you would like to grow to $12,000 over the
next 7 years, then what interest rate do you need to achieve this goal assuming annual
compounding? Show your work (at least the problem set up before entering numbers into
calculator)

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