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An investor deposits $3,400,000 in an investment fund today and after 2 years he withdraws $4,800,000. Calculate the interest rate compounded monthly.

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Answer to a math question An investor deposits $3,400,000 in an investment fund today and after 2 years he withdraws $4,800,000. Calculate the interest rate compounded monthly.

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Birdie
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99 Answers
1. Use the compound interest formula:

A = P \left(1 + \frac{r}{n}\right)^{nt}

2. Substitute the values:

4,800,000 = 3,400,000 \left(1 + \frac{r}{12}\right)^{12 \times 2}

3. Simplify and solve for \( r \):

\frac{4,800,000}{3,400,000} = \left(1 + \frac{r}{12}\right)^{24}

1.4117647 = \left(1 + \frac{r}{12}\right)^{24}

4. Take the 24th root of both sides:

\left(1.4117647\right)^{\frac{1}{24}} = 1 + \frac{r}{12}

5. Isolate \( r \):

\left(1.4117647\right)^{\frac{1}{24}} - 1 = \frac{r}{12}

6. Multiply by 12:

r = 12 \left(\left(1.4117647\right)^{\frac{1}{24}} - 1\right)

7. Calculate the numerical value:

r\approx0.173665\text{ or }17.3665\%

8. Answer:

r\approx0.173665\text{ or }17.37\%

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