A bank advertises: "Deposit $ 10 000 today and withdraw $ 15 000 in five years". What would be the annual interest rate on your money, if the interest is the same all the time?
Please show all the steps...|||In homework terms 10% a year for 5 years would allow $10K to grow to $15 K in 5 years.|||due to compound interest, if the interest rate was 10% then at the end of the first year you'd have $11000, but at the end of the second year you'd have another 10% of $11000, so you'd have $12100, and so on... after 5 years you'd have $16105.10
The interest rate required to turn $10000 into $150000 over 5 years is about 8.4472%. I can't show you my workings as I used a simple excel spreadsheet to figure this out.. maybe google 'compound interest forumlas' if you need one?
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