Casey has $1,500 to invest today and would like to buy a $4,500 jet-ski in four
ID: 2735666 • Letter: C
Question
Casey has $1,500 to invest today and would like to buy a $4,500 jet-ski in four years. if interest is compounded annually, what interest rate will she have to receive to reach her goal? Casey has $1,500 to invest today and would like to buy a $4,500 jet-ski in four years. if interest is compounded annually, what interest rate will she have to receive to reach her goal? Casey has $1,500 to invest today and would like to buy a $4,500 jet-ski in four years. if interest is compounded annually, what interest rate will she have to receive to reach her goal? Casey has $1,500 to invest today and would like to buy a $4,500 jet-ski in four years. if interest is compounded annually, what interest rate will she have to receive to reach her goal?Explanation / Answer
Present value (PV) = 1500
Future value (FV) = 4500
n=4
r = ?
FV = PV*(1+r)^n
4500 =1500*(1+r)^4
3 =(1+r)^4
1+r = 1.3160
r = 0.3160 = 3.60%
The intrerest rate she requires annually is 31.60%