Stanley Roper has $2,300 that he is looking to invest. His brother approached him with an investment opportunity that could give Patrick $4,800 in 4 years. What interest rate would the investment have to yield in order for Stanley's brother to deliver on his promise? (Answer needs to be stated as a decimal. For example:.1192) Round to four decimal places.

Question

Business

Colin Eaton

23 July, 14:43

Stanley Roper has $2,300 that he is looking to invest. His brother approached him with an investment opportunity that could give Patrick $4,800 in 4 years. What interest rate would the investment have to yield in order for Stanley's brother to deliver on his promise? (Answer needs to be stated as a decimal. For example:.1192) Round to four decimal places.

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Answers (1)

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Huang · Answer 1

20.19%

Explanation:

The computation is shown below:

As we know that

Future value = Present value * (1 + rate) ^number of years

where,

Present value = $2,300

Future value = $4,800

Time period = 4 years

So, the interest rate is

$4,800 = $2,300 * (1 + rate) ^4

2.086957 = (1 + rate) ^4

So after solving this, the interest rate is 20.19%