Finding an interest rate: Suppose you invest J$ 150,000 in a special 5-year savings account with a fixed annual rate r, with monthly compounding. The amount of money A in the account after 5years (60 months) is: A (r) = 150,000(1 + r12) 60. Your goal is to have $200,000 in the account after 5 years. i. Use the Intermediate value theorem to show there is a value of r in (0,0.07) that is an interest rate between 0% and 7% for which A (r) = 200,000ii. Use a graphing utility to illustrate your explanation in part (i) and then estimate the interest rate required to reach your goal.

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Answered: Finding an interest rate: Suppose you…

1st Edition

ISBN:9781938168383

Author:Jay Abramson

Publisher:Jay Abramson

Chapter6: Exponential And Logarithmic Functions

Section6.1: Exponential Functions

Problem 66SE: Kyoko has 10,000 that she wants to invest. Her bankhas several investment accounts tochoose from,...

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Finding an interest rate: Suppose you invest J$ 150,000 in a special 5-year savings account with a fixed annual rate r, with monthly compounding. The amount of money A in the account after 5years (60 months) is: A (r) = 150,000(1 + r12) ⁶⁰. Your goal is to have $200,000 in the account after 5 years.

i. Use the Intermediate value theorem to show there is a value of r in (0,0.07) that is an interest rate between 0% and 7% for which A (r) = 200,000

ii. Use a graphing utility to illustrate your explanation in part (i) and then estimate the interest rate required to reach your goal.

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